Hoe Leong Corporation Ltd. Annual Report 2014

Transcription

Steering
Towards
Value
Hoe Leong Corporation Ltd.
was incorporated in 1994 and was
successfully admitted to the Official List
of the Singapore Exchange Securities
Trading Limited (“SGX-ST”) in 2005.
01
Contents
02 Corporate Profile
03 Owned Vessels
04 Chairman’s Statement
06 Board of Directors
08 Key Management Team
10 Operations Review
12 Group Structure
13 Corporate Governance Report
27 Financial Contents
97 Shareholding Statistics
99 Notice of Annual General Meeting
Proxy Form
Corporate Information
02
Corporate Profile
Hoe Leong Corporation Ltd. (“Hoe Leong” or the “Group”) was incorporated in
Singapore on 18 November 1994 and was successfully admitted to the Official
List of the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 5
December 2005.
TMI
TRATTORI
MACCHINE
TMI
TRATTORI
MACCHINE
TMI
TRATTORI
MACCHINE
The Group’s principal business activities entail trading and distribution of an extensive range of equipment parts
for both heavy equipment and industrial machinery which include brands such as Caterpillar, Cummins, Hitachi,
Hyster, Kato, Kobelco, Komatsu, Mitsubishi, P&H and Sumitomo. The Group also designs and manufactures
equipment parts for both heavy equipment and industrial machinery under its own in-house brand names, “KBJ”,
“OEM” and “ROSSI”. Since 2004, it commenced manufacturing certain equipment parts through its subsidiaries
in the People’s Republic of China (“PRC”). The Group sells directly to end-users as well as through distributors
in Singapore and overseas markets including Indonesia, Malaysia, PRC and the emerging markets such as the
Middle East. The end-users of its products are generally operators of heavy equipment and industrial machinery
in the building and infrastructure construction, forestry, marine, mining and plantation industries. Currently, the
Group serves over 1,200 customers and carries about 20,000 types of equipment parts in 25 categories for over
100 brands of products. The Group can readily provide assistance to customers and fulfil their requirements,
because of its extensive experience in the industry. Its large and varied inventories and regional sales network
are beneficial to its customers as it has easy accessibility to replacement parts that shortens their equipment
downtime.
In 2013, the Group established Arkstar Offshore Pte Ltd, its offshore marine arm division, to consolidate all vessels
chartering operations and resource management.
Owners of offshore support vessels
Building on Hoe Leong’s successful foray into the offshore oil & gas industry in 2008, Arkstar Offshore is the
incorporated arm that represents the Group’s fervent advancement into the vessel chartering business. Continued
efforts are made to enhance Arkstar Offshore’s presence as an owner of offshore support vessels, through close
partnerships with strong and credible industry players, gainful ventures into diverse geographic markets, and
sound investments in young and modern vessels.
Commitment to client expectations
Possessing a sizeable fleet of anchor handling tug supply vessels, platform supply vessels and a mud-processing
barge, Arkstar Offshore is keen on fleet expansion to better serve the needs of its clients. The establishment
of a dedicated in-house ship management team, led by experienced professionals, bolsters Arkstar Offshore’s
commitment to client responsiveness.
Owned Vessels
Arkstar Voyager
Platform Supply Vessel designed to transport supplies
and cargo to and from offshore infrastructures.
Type:
10000bhp Platform Supply Vessel
Notation: Fire Fighting Class 1+AMS+DPS 2
Year Built: 2009
Class:
ABS
Arkstar Unicorn
Vessel designed to perform a range of tasks like
transportation to carry equipments, goods, and
personnel to offshore platform.
Type:
3200bhp Utility Support Vessel
Notation: NS,MNS
Year Built: 2010
Class:
ABS
Arkstar Eagle 1
Anchor Handling Tug Supply Vessel provides anchor
handling and towage services to offshore platforms,
production vessels and barges.
Type:
5150bhp AHTS
Year Built: 2009
Class:
ABS
Arkstar Eagle 3
Anchor Handling Tug Supply Vessel provides anchor
handling and towage services to offshore platforms,
production vessels and barges.
Type:
5150bhp AHTS
Year Built: 2009
Class:
ABS
Arkstar Energy
Mud Processing Barge to facilitate on-site production
of mud for drilling operations, while serving as an
excellent cargo carrying vessel.
Type:
Mud Processing barge , 5000 bhp
Notation: N/A
Year Built: 2004
Class:
ABS
03
04
Chairman’s Statement
The Group will continue to execute
its planned diversification of the
traditional industrial Equipment Parts
business while focusing on building up
sustainable and high growth income
streams through the provision of
vessel-chartering services for the oil
and gas industry.
On behalf of the board, I am pleased to present the annual
report for the financial year ended 31 December 2014
(“FY2014”).
Performance Review
In FY2014, our total revenue decreased by 6.4% to S$66.4
million as compared to S$70.9 million for the year ended 31
December 2013 (“FY2013”). The drop in revenue was due to a
decline in revenues for the Design and Manufacture segment
and Trading and Distribution segments, which was partially
offset by the increase in revenue from the Vessel Chartering
segment.
The Group recorded a decrease in sales revenue by 6.5% to
S$38.3 million in FY2014 for our Design and Manufacture
segment, as well as a decrease in sales revenue by 18.1%
to S$19.9 million for our Trading and Distribution segment
as compared to FY2013. On the other hand, revenue for the
Vessel Chartering segment increased by 44.7% to S$8.2
million in FY2014.
Correspondingly, gross profit contributions from the Design
and Manufacture, and Trading and Distribution segments
decreased by S$5.8 million while gross profit contributions
from the Vessel Chartering segment increased by S$1.5
million in FY2014. This led to overall gross profit margin
decreasing to 14.5% in FY2014 as compared to 19.7% in
FY2013.
Together with the share of losses of associates of S$12.3
million attributable to Semua International Sdn Berhad and
its subsidiaries (“Semua Group”), the Group recorded a loss
after tax of S$23.3 million for FY2014.
Business Overview
Industrial Equipment Parts
In FY2014, the Group’s heavy equipment parts division faced
challenges as the demand for parts continued to remain
stagnant due to the persistent weakness in the global
macroeconomic environment. We believe that this challenge
will continue in 2015 and our business market will remain
competitive. On our part, we will continue to streamline our
manufacturing capabilities in order to improve operating
efficiencies and stay vigilant in the areas of cost management
while the market recovers.
Vessel Chartering
Notwithstanding the current uncertainties in the oil and gas
sector, the Group in FY2014 had started to focus on growing
its vessel chartering business progressively in terms of fleet
size and capabilities. The Group currently owns a sizeable
fleet under its subsidiary Arkstar Offshore Pte. Ltd. (“Arkstar
Offshore”) which comprises: Platform Supply Vessel (“PSV”),
Mud Processing Barge, Anchor Handling Tug Supply (“AHTS”)
Vessel and Utility Vessel.
With an extensive network across Asia to the Middle East, the
Group is always on the lookout to extend our vessel chartering
business network through geographical expansion.
The Group has made significant forays into the Middle East
with a 3+2 years charter for its PSV named Arkstar Voyager
to a major Saudi Arabian upstream oil company, which
commenced in the second half of FY2014. Arkstar Voyager
has met with the client’s stringent standards and is currently
deployed to support marine operations for the transport of
supplies and cargos to offshore assets in the Arabian Gulf.
To further expand the Middle East business, the Group has
also acquired a Utility Vessel which was renamed Arkstar
Unicorn for approximately US$6.1 million. Arkstar Unicorn
was awarded a 5+2 years chartering contract from 2014 by the
same Saudi Arabian upstream oil company and is currently
deployed in the Middle East waters.
The Group continues to actively bid for long term contracts for
all its vessels. It has also taken steps to complete dry docking
and upgrading of the vessels to customers’ specifications so
that they can be fully utilised in the financial year ended 31
December 2015 (“FY2015”) with minimal downtime.
Bioenergy Technologies Berhad (“ABT”, and collectively, the
“HOA Parties”) for the eventual disposal of the Group’s entire
indirect equity interests in two wholly-owned subsidiaries
of Semua International Sdn Bhd (“SISB”), namely Semua
Shipping Sdn Bhd (“SSSB”) and Semado Maritime Sdn Bhd
(“SMSB”) to ABT (the “Proposed Disposal”).
The rationale for the Proposed Disposal is because of the
weak performance of SISB and its subsidiaries (the “Semua
Group”). The proposed disposal will be executed over a series
of transactions and the proposed transactions will allow the
Group to free up its cash, strengthen its balance sheet and
settle various liabilities and disputes that occurred in FY2014.
The disposal is in line with the Group’s ongoing objective of
sourcing for alternative sustainable sources of revenue and
improving returns to the shareholders.
Looking ahead
Moving ahead, the Group will continue to execute its planned
diversification of the traditional industrial Equipment Parts
business while focusing on building up sustainable and high
growth income streams through the provision of vesselchartering services for the oil and gas industry.
The macroeconomic and Singapore’s outlook for the oil
and gas industry has been dampened by the uncertainty of
plunging oil prices. However, the Group is of the view that as
its vessels are deployed by customers more in shallow waters
which has a lower overall oil production cost as compared to
deep sea production, the effect of the lower oil prices has not
directly impacted its charters.
In Appreciation
In closing, I would like to express my gratitude to the
shareholders for their continuous faith in us through this
challenging FY2014. I would also like to thank my fellow
board members for their valuable advice over the years, as
well as the support of our business partners, suppliers, and
dedication of our staff and management.
James Kuah Geok Lin
Chairman and Chief Executive Officer
Disposal of Oiltanker Business
The Group decided to restructure its oiltanker business
by entering into a binding heads of agreement in January
2015 with Reachmont Logistics Sdn Bhd (“RLSB”) and Asia
05
06
Board of Directors
Mr Ang Mong Seng
Geoffrey Yeoh
Mr James Kuah Geok Lin
Mr Quah Yoke Hwee
Hoon Ching Sing
Mr Paul Kuah Geok Khim
Mr James Kuah Geok Lin is our Chairman and CEO. He has
been one of our Executive Directors since 18 November 1994.
He was last re-elected as a Director on 25 April 2014. Mr Kuah
is a member of the Nominating Committee.
Mr Kuah holds a Bachelor degree in Architecture from the
University of Singapore. He started as an architect in 1974
with the Housing Development Board. In 1978, Mr James
Kuah joined the Company as a Director in charge of operations
and played a key role in the Company’s regional drive into
Indonesia and Malaysia. Under his leadership, the Company
was ranked 24th in the 2000 Enterprise 50 Award organized
by Andersen Consulting and The Business Times with support
from the Economic Development Board. His other advisory
positions include that of Permanent Honorary Chairman of
the Singapore Metal and Machinery Association, Chairman
of Nanyang Kuah Si Association, Honorary council member
of the Singapore Chinese Chamber of Commerce & Industry,
Vice-Chairman of the Singapore Ann Kway Association and
Corporate member of the Singapore Institute of Architects.
Mr Paul Kuah Geok Khim has been our Sales and Marketing
Director (Overseas) since 22 December 1994 and was last
re-elected as a Director on 29 April 2013. He began his career
with our Group in 1979. Prior to his present position, he was in
charge of warehousing and inventory control, gaining valuable
experience in this field. Presently, as a Sales and Marketing
Director, he oversees all our branches’ operations and
major export markets. With a team of business development
personnel under him, he ensures that every business
opportunity in the emerging markets is well tapped.
Mr Quah Yoke Hwee is our Sales and Marketing Director
(Singapore). He joined the Board on 18 November 1994 and
was appointed the Managing Director of the Company since
15 January 1996. He was last re-elected as a Director on 14
May 2012. He is responsible for overseeing the Company’s
daily trading and distribution operations in Singapore and the
after-sales and front office services. Mr Quah has extensive
experience in the equipment parts trading and distribution
business. He holds a H.S.C. “A” level certificate.“A” level
certificate.
Mr Ang Mong Seng was appointed as an Independent Director
on 29 September 2005 and was last re-elected as a Director
on 25 April 2014. He is the Chairman of the Remuneration
Committee and a member of the Audit Committee and the
Nominating Committee.
Mr Ang was a former Member of Parliament for Hong Kah
GRC and the ex-Chairman of Hong Kah Town Council. Mr Ang
07
has more than 33 years of experience in Estate Management.
Mr Ang is also an Independent Director of United Fiber
System Limited, Ecowise Holdings Limited, AnnAik Ltd, Gaylin
Holdings Limited and Chip Eng Seng Corporation Ltd. Mr Ang
obtained a Bachelor of Arts degree from Nanyang University
in 1973.
Yeoh Seng Huat Geoffrey was appointed as an Independent
Director on 2 January 2015. He is the Chairman of the
Nominating Committee and a member of the Audit Committee
and the Remuneration Committee.
Mr Yeoh holds a Bachelor of Science Degree (First Class
Honours) in Economics from the London School of Economics
and is a Fellow of the Association of Chartered Certified
Accountants in the United Kingdom. He was in banking for
16 years till 1996. After that he took on senior management
positions in certain SGX listed companies until 2014. Mr Yeoh
is also an Independent Director of Global Testing Corporation
Limited.
Hoon Ching Sing was appointed as an Independent Director
on 1 October 2014. He is the Chairman of the Audit Committee
and a member of the Remuneration Committee.
Mr Hoon is a Fellow of the Institute of Singapore Chartered
Accountants and The Association of Chartered Certified
Accountants. He is also a Chartered Insurance Practitioner of
the Chartered Insurance Institute and an ordinary member of
the Singapore Institute of Directors. He has attended training
programs at INSEAD and The Wharton School and Financial
Risk Management programs. Mr Hoon has more than 31
years of audit and advisory experience. His audit experience
covers a wide range of listed and unlisted entities including
a large number of banks, insurers, securities brokers, fund
managers, and funds. His advisory experience covers the
business acquisition, integration, separation and closures,
corporate finance, fund-raising, insolvencies, corporate
governance, risk management, internal audits, bank treasury
controls, and financial investigations.
Mr Hoon was a partner of KPMG till September 2013 and is
currently the Chief Executive Officer of JH Advisers Sdn Bhd.
He is also an Independent Director and the Audit Committee
Chairman of QT Vascular Ltd.
08
Key Management Team
Mr Lim Lian Tuan
Director of Sales and Marketing
Ho Leong Tractors Sdn. Bhd.
Mr Lim Lian Tuan is the Sales and Marketing Director of our wholly-owned subsidiary, Ho Leong Tractors Sdn Bhd (“HL
Tractors”) in Malaysia. He joined HL Tractors in 1987 and oversees its sales and marketing operations. From 1984 to 1986, he
worked in Ho Leong Machinery Sdn. Bhd. as a Sales Executive for the Malaysian operations. Prior to that, Mr Lim worked as a
Sales Executive with TAS Berhad and Trackspare Sdn Bhd, both of whom were distributors of equipment parts for both heavy
equipment and industrial machinery. He holds the equivalent of a GCE ‘O’ certificate.
Mr Bradley Oats
Regional Director
Trackspares (Australia) Pty Ltd and Trackex Pty Ltd.
Mr Bradley Oats is the Resident Director of our wholly-owned subsidiaries, Trackspares (Australia) Pty Ltd (Trackspares)
and Trackex Pty Ltd. He joined Trackspares in August 2012 and oversees the management and operations within Eastern
Australia and the sales of equipment parts and services to the earthmoving and mining industry in this region. He holds an AD
in Business Management & Marketing & has had vast experience in the earthmoving & construction at a management level
over the past 16 years.
Mr Cho Hang Lae
President
Korea Crawler Track Ltd
Mr Cho Hang Lae is the President of our wholly-owned subsidiary, Korea Crawler Track Ltd (“Korea Crawler”) in South Korea.
He joined Korea Crawler in 2010 and oversees its sales and manufacturing operations. Prior to joining us, Mr Cho has been
working in the undercarriage industry for more than 13 years in sales, production and operations management. He holds a
Bachelor degree in International Trade from the University of Kyungnam in South Korea.
Mdm Kuah Geok Khim
Operations Manager
Mdm Kuah Geok Khim is our Operations Manager. She joined our Company in 1975 and is responsible for the administrative
functions of the Group including general office administration, the maintenance and procurement of office equipment and
computerization. She is also in charge of our inventory management and management information system. In addition, she is
responsible for our sales and purchases, shipping, import and export functions.
09
Mr Alvin Kuah Han Zhou
Group Business Development Manager
Mr Alvin Kuah Han Zhou is our Group Business Development Manager. He joined our company in 2009 and was promoted to
Business Development Manager with effect from 1 April 2010 and subsequently Group Business Development Manager with
effect from 1 April 2013. Mr Alvin Kuah is responsible for all the commercial, business development and new market activities
for the oil and gas sector, and he also oversees the daily operations and budgeting of our vessel chartering business. Mr Alvin
Kuah is also involved in the commercial and business development aspect of Semua Shipping, the shipping arm of the Hoe
Leong Corporation Group. Prior to joining our company, Mr Alvin Kuah was in the semiconductor manufacturing industry for
two years specializing in application sales engineering. He holds a Bachelor degree in Electrical Electronics and Engineering
from Royal Melbourne Institute of Technology from Australia.
Mr Raymond Quah Eng Kiat
Sales and Marketing Manager
Mr Raymond Quah Eng Kiat is our Sales and Marketing Manager. He joined our company in 2008 and was promoted to Sales
and Marketing Manager with effect from 1 April 2010. He is responsible for all overseas sales and marketing activities
predominantly for Russia and CIS countries. Prior to joining our company, Mr Raymond Quah was in the banking sector for five
years specializing in anti-money laundering and compliance matters for Standard Chartered Bank and Citigroup respectively.
He holds a Master degree majoring in International Business from the University of New South Wales from Sydney.
Mr Kelvin Kuah Zhichao
Business Development Manager
Mr Kelvin Kuah Zhichao is our Business Development Manager. He joined our company in 2011. He is responsible for the
business development and purchasing activities of our equipment parts business and he specialises in overseas sales and
marketing activities predominantly for Europe and Asia. Prior to joining our company, he was working in the Credit Control
department of Kim Eng Securities Pte Ltd and as a Business Development Manager in Hoe Leong Metal & Machinery Pte
Ltd, spending two years in each company. He holds a Bachelor degree in Electrical and Electronic Engineering from Nanyang
Technological University in Singapore.
Mr Teh Teong Lay
Group Financial Controller
Mr Teh Teong Lay is our Group Financial Controller. He joined our company in 2012 and oversees the overall financial and
accounting functions of the Group. Prior to joining us, Mr Teh held several key finance positions in various organizations. He
holds a Bachelor of Business degree majoring in Accounting and Finance and a member of CPA Australia.
10
Operations Review
For the year ended 31 December 2014 (“FY2014”), the Group’s revenue decreased
by S$4.5 million, or 6.4%, to S$66.4 million as compared to S$70.9 million for the
financial year ended 31 December 2013 (“FY2013”). The decline in total revenue
was mainly due to a decline in revenue from the Group’s Design and Manufacture
segment of S$2.6 million and Trading and Distribution segment of S$4.4 million
respectively. This was partially offset by the rise in revenue from Vessel Chartering
segment of S$2.5 million.
Lower demand of in-house brand of equipment parts from our customers caused
the sales revenue from the Design and Manufacture segment to fall by S$2.6 million,
or 6.5%, to S$38.3 million in FY2014 as compared to S$40.9 million in FY2013.
Charter revenue from the Vessel Chartering segment increased by S$2.5 million,
or 44.7%, to S$8.2 million in FY2014 as compared to S$5.6 million in FY2013. The
increase in charter revenue was mainly due to our
vessel “Arkstar Voyager” and our newly acquired vessel “Arkstar Unicorn”.
Sales revenue from Trading and Distribution segment dipped by S$4.4 million, or
18.1%, to S$19.9 million in FY2014 as compared to S$24.3 million in FY2013 due to
lower demand of third party brands of equipment parts from our customers.
Overall gross profit margin decreased to 14.5% in FY2014 as compared to 19.7%
in FY2013. The Design and Manufacture, and Trading and Distribution segment
had contributed to the decline in profit margin with gross profit contribution falling
by S$5.8 million in FY2014, while the gross profit contributions from the Vessel
Chartering segment increased by S$1.5 million in FY2014.
Operating Income and Expenses in FY2014
Other income decreased by S$2.8 million, or 81.7%, to S$0.6 million in FY2014 mainly
due to a decrease in interest income from associate.
Distribution expenses increased by S$0.2 million, or 3.8%, to S$5.6 million in
FY2014 mainly due to higher travelling expenses, packing and delivery costs
incurred in FY2014 while other expenses decreased by S$1.2 million, or 15.5%, to
S$6.6 million in FY2014, mainly due to the foreign exchange gain of S$0.7 million,
and the provision of slow moving stock write back of S$1.0 million. Share of losses
of associates of S$12.3 million in FY2014 was attributed to the Group’s associated
company-Semua International Sdn Bhd and its subsidiaries (“Semua Group”).
Other comprehensive income for FY2014
Foreign currency translation gain of S$0.7 million arose from foreign operations in
FY2014 relates mainly to the Group’s net investment in foreign operations which are
denominated in United States Dollar (“USD”), as the USD appreciated against the
Singapore Dollar (“SGD”) in FY2014.
Statement of Financial Position
Property, plant and equipment increased by S$36.7 million, or 80.5%, to S$82.3
million at 31 December 2014 mainly due to an acquisition of the new vessel, “Arkstar
Unicorn” and the addition of two other vessels, which were previously included
as non-current assets held for sales; and foreign currency translation gain arose
from the translation of USD denominated property, plant and equipment of certain
subsidiaries into SGD as a result of the appreciation of the USD against the SGD in
FY2014. This was partially offset by the additional depreciation charged for FY2014.
Investments in associates decreased by S$12.5 million, or 100%, to S$nil million
at 31 December 2014 mainly due to the share of losses of associates in FY2014.
Assets held for sales relates to two vessels which were transferred to Property,
Plant and Equipment during the year upon restructuring of Aries Group.
Trade and other receivables decreased by S$2.3 million, or 4.6%, to S$48.2 million
at 31 December 2014 mainly due to impairment on advances granted to Semua
Group in FY2014. Financial liabilities increased by S$11.2 million, or 16.1%, to
S$80.5 million at 31 December 2014 mainly due to additional bank borrowings.
Deferred income resulted from the sale and leaseback of the Company’s leasehold
property and A&A Extension, which was completed on 13 June 2011 and 9 January
2013 respectively. Deferred income, being the excess of the sale consideration over
its fair value, is a portion of the total gain on sale of the property and A&A Extension,
which is deferred and amortized on a straight-line basis over the applicable noncancellable lease term. Deferred income decreased by S$5.2 million, or 40.9%, to
S$7.5 million at 31 December 2014 due to the recognition of additional deferred
income on the A&A Extension, which was partially offset by the amortization of
deferred income in FY2014.
Trade and other payables increased by S$2.2 million, or 10.6%, to S$22.9 million at
31 December 2014 was due mainly to the increase in trade and other payables of
S$7.1 million in FY2014. This was partially offset by the repayment to the immediate
and ultimate holding company of S$4.9 million.
Statement of Cash Flows
For FY2014, the Group generated net cash outflows of S$4.4 million, comprising
net cash outflows from operating activities of S$11.4 million and investing activities
of S$10.6 million respectively. This was partially offset by net cash inflows from
financing activities of S$17.6 million.
At 31 December 2014, the Group’s cash and cash equivalents amounted to S$6.0
million (31 December 2013: S$10.9 million).
11
12
Group Structure
100%
Equipment parts business
Vessel chartering business
Ho Leong Tractors Sdn.
Bhd.
(Malaysia)
*
This company is dormant
100%
Kunshan Kanto Buhin
Manufacturing Co., Ltd.
(China)
100%
Hoe Leong Machinery
(HK) Limited
(Hong Kong)*
Quanzhou Kanto
Buhin Machinery
Manufacturing Co., Ltd
(China)
100%
99%
PT Trackspare
(Indonesia)
100%
Trackspares
(Aust) Pty. Ltd.
(Australia)
Trackex Pty Ltd
(Australia)
100%
83.2%
Shenyang Milequip
Industry Co., Ltd*
(China)
100%
Korea Crawler
Track Ltd.
(South Korea)
80%
Ebony Ritz
Sdn Bhd
2%
49%
Semua International
Sdn Bhd (Malaysia)
100%
Arkstar Offshore
Pte Ltd
Semua Shipping
Sdn Bhd (Malaysia)
100%
Semua Ship Agency
And Supplies Pte Ltd
100%
Semado Maritime
Sdn Bhd (Malaysia)
100%
Arkstar Voyager
Pte Ltd
100%
Semua Chemical
Shipping
Sdn Bhd (Malaysia)
100%
Arkstar Energy
Pte Ltd
100%
Mini Tanker
Chartering
Sdn Bhd (Malaysia)
100%
Arkstar Ship
Management Pte Ltd
100%
Arkstar Unicorn
Pte Ltd
100%
Arkstar Eagle 3
Pte Ltd*
100%
Markstar Marine
Pte Ltd*
33%
Corporate Governance Report
The Board of Directors (the “Board”) is committed to ensure high standards of corporate governance to protect
the interests of shareholders and at the same time to enhance long term shareholders’ value through corporate
performance and accountability. The Board observes and adheres to the principles and guidelines set out in the
revised Code of Corporate Governance 2012 (the “Code”). Where there are deviations from the Code, appropriate
explanations are provided.
A. BOARD MATTERS
The Board’s Conduct of its Affairs
Principle 1: Every company should be headed by an effective Board to lead and control the company. The
Board is collectively responsible for the success of the company. The Board works with the Management to
achieve this and the Management remains accountable to the Board.
The Board is entrusted with the responsibility of the overall management of the Company and their main duties are
to:(a)provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human
resources are in place for the Company to meet its objective;
(b)approve board policies, strategic plans, and financial objectives of the Group and monitor the performance
of Management;
(c)
approve annual budgets, funding, material investment and divestment proposals;
(d)
approve interim and full year results and announcements and annual report;
(e)
ensure an adequate system of internal controls and compliance with financial reporting requirements;
(f)
review the financial performance of the Group, proposal of dividends and review interested person
transactions;
(g)
approve the nomination of directors and appointment of key personnel; and
(h)
assume responsibility for corporate governance.
To facilitate effective management, certain functions have been delegated by the Board to various Board Committees,
namely the Audit Committee, the Nominating Committee and the Remuneration Committee. The Board Committees
operate under clearly defined terms of reference. The Chairman of the respective Committees will report to the
Board with their decisions and/or recommendations, the ultimate responsibility on all matters are made by the Board
as a whole.
The Board holds at least four meetings every year and ad-hoc meetings are convened when circumstances require.
Article 106 of the Company’s Articles of Association (“AoA”) permits meetings of the Directors to be conducted
by means of telephone conference or other methods of simultaneous communication by electronic or telegraphic
means.
13
14
A record of the Directors’ attendances at Board and Board Committee meetings during the financial year ended 31
December 2014 is disclosed as follows:
Name of Director
Kuah Geok Lin
Kuah Geok Khim
Quah Yoke Hwee
Lim Kok Hoong (1)
Ang Mong Seng
Peter Boo Song Heng
Hoon Ching Sing (2)
Audit
Nominating
Remuneration
Board
Committee
Committee
Committee
No. of
No. of
No. of
No. of
meetings Attendance meetings Attendance meetings Attendance meetings Attendance
5
5
5
5
5
5
1
4
4
4
4
3
4
1
–
–
–
4
4
4
1
–
–
–
4
3
4
1
2
–
–
–
2
2
–
2
–
–
–
2
2
–
–
–
–
1
1
1
1
–
–
–
1
1
1
1
Notes:
(1) Mr Lim Kok Hoong resigned on 30 October 2014.
(2) Mr Hoon Ching Sing was appointed on 01 October 2014.
The Directors are provided with regular updates on changes in the relevant laws and regulations during Board
Meetings. Where possible and when opportunity arises, the Directors will be invited to locations within the Group’s
operating businesses to enable them to obtain a better perspective of the business and enhance their understanding
of the Group’s operations. The directors of the Company are encouraged to attend seminars and trainings conducted
by external organisations at the expense of the Company so that they are able to keep pace with new laws, regulations,
changing commercial risk and accounting standards.
Board Composition and Guidance
Principle 2: There should be a strong and independent element on the Board, which is able to exercise
objective judgment on corporate affairs independently, in particular, from Management. No individual or small
group of individuals should be allowed to dominate the Board’s decision making.
The Board comprises six directors, three of whom are Independent Directors.
Half of the Board is independent. The strong independent element on the Board ensures that it is able to exercise
objective and independent judgment on corporate affairs.
The role of the Independent Directors is particularly important in ensuring that the strategies proposed by
Management are constructively challenged, fully discussed and examined, and take into account the long term
interests of the Group’s stakeholders, which includes shareholders, employees, customers and suppliers.
The Executive Directors have extensive experience in the heavy equipment and industrial machinery equipment
parts industry and the non-executive directors are experienced and successful in their respective professions. The
Board’s structure, size and composition is reviewed annually by the Nominating Committee which is of the view that
the current size of the Board is appropriate, taking into account the nature and scope of the Group’s operations, to
facilitate effective decision making. The Nominating Committee is satisfied that the Board comprises directors who
as a group provide core competencies such as accounting, finance, business and management experience, industry
knowledge, strategic planning experience and customer-based experience and knowledge to lead the company
effectively. Profiles of the Directors are set out in the “Board of Directors” section in this Annual Report.
Principle 3: There should be a clear division of responsibilities at the top of the company – the working of the
Board and the executive responsibility of the company’s business – which will ensure a balance of power and
authority, such that no one individual represents a considerable concentration of power.
The Chairman and Chief Executive Officer (“CEO”) of the Company is Mr Kuah Geok Lin. The Board, after careful
consideration, is of the opinion that it is not necessary, under current circumstances, to separate the roles of the
Chairman and CEO. This is after taking into consideration the size, scope and nature of the operations of our Group,
together with the strong presence of our Independent Directors which comprises half of the Board, who ensure that
decision-making is based on collective decision and that there is no concentration of power and authority vested in
one individual.
Our Chairman and CEO has played an instrumental role in developing the business of our Group. He has extensive
industry experience and has also provided our Group with strong leadership and vision. It is hence the view of the
Board that it is in the best interests of our Group to adopt a single leadership structure, whereby the Chairman and
CEO are the same individual.
The Chairman takes an active role in the management of the Group and also bears responsibility for the workings
of the Board, ensuring the integrity and effectiveness of the governance process of the Board, ensuring that Board
meetings are held regularly, and setting the Board meeting agenda in consultation with all members of the Board.
The Chairman reviews board papers before they are presented to the Board and ensures that Board members are
provided with adequate and timely information.
The Board has appointed Mr Hoon Ching Sing as the Lead Independent Director on 30 October 2014, where
shareholders with concerns may contact him directly, when contact through the normal channels via the Chairman
and Chief Executive Officer has failed to provide satisfactory resolution, or when such contact is inappropriate.
Board Membership
Principle 4: There should be a formal and transparent process for the appointment of new directors to the
Board.
The Nominating Committee (“NC”) is established for the purposes of ensuring that there is a formal and transparent
process for all Board appointments. The NC comprises the following three members, majority of whom are
Independent Directors:Mr Yeoh Seng Huat Geoffrey (Chairman, appointed on 02 January 2015)
Mr Peter Boo Song Heng (Chairman, resigned on 02 January 2015)
Mr Ang Mong Seng (Member)
Mr Kuah Geok Lin (Member)
The NC has adopted written terms of reference defining its membership, administration and duties. Duties and
responsibilities of the NC include:
(a)Reviewing and recommending the (i) Board succession plans of the Directors, in particular the Chairman
and Chief Executive Officer, (including Independent Directors) taking into consideration each Director’s
contribution and performance; (ii) the development of a process for evaluation of the performance of the Board
of Directors, the board committees and Directors; (iii) the review of training and professional development
programmes for the Board of Directors; (iv) the appointment and re-appointment of Directors (including
alternate Directors, if applicable);
15
16
(b)Reviewing annually the composition of the Board to ensure that our Board has an appropriate balance of
expertise, skills, attributes and abilities;
(c)Determining annually whether or not a Director is independent in accordance with the Code and any other
salient factors;
(d)Reviewing and deciding whether or not a Director is able to and has been adequately carrying out his duties
as a Director;
(e)Reviewing and approving of any new employment of related persons and the proposed terms of their
employment; and
(f)Evaluating the performance and effectiveness of the Board as a whole.
Each member of our NC shall abstain from voting on any resolution in respect of his re-nomination as a director.
The search and nomination process for new directors, if any, will be through search companies, contacts and
recommendations that go through the normal selection process, to cast its net as wide as possible for the right
candidates.
The AoA of the Company requires one-third of the Directors, or if their number is not a multiple of three, the
number nearest to but not less than one-third of our Directors, to retire and subject themselves to re-election by
the shareholders at every Annual General Meeting (“AGM”). In addition, all Directors of the Company, including the
Managing Director after his initial term of engagement as Managing Director, shall retire from office at least once
every three years. A retiring Director is eligible for re-election at the meeting at which he retires.
Pursuant to Article 95(2) of the Company’s AoA, Mr Kuah Geok Khim and Mr Quah Yoke Hwee shall retire at the
forthcoming AGM. Pursuant to Article 96 of the Company’s AoA, the newly appointed Directors, Mr Hoon Ching
Sing and Mr Yeoh Seng Huat Geoffrey shall also retire at the forthcoming AGM. The retiring Directors, being eligible,
have offered themselves for re-election at the forthcoming AGM. The NC, having considered the attendance and
participation of these Directors at the Board and Board committee meetings and in particular, their contribution to
the business and operations of the Company, has recommended their re-election. The Board has concurred with the
NC’s recommendation.
As an individual Director’s ability to commit time to the Group’s affair is essential, the NC has determined that the
maximum number of listed company board representations which any Director of the Company may hold is eight. All
the Directors have complied with this requirement.
Mr Ang Mong Seng has served the Board for more than nine years (appointed on 29 September 2005). The Board
has determined that Mr Ang Mong Seng has remained independent in character and judgment despite the length
of service.
It should also be noted that Mr Lim Kok Hoong and Mr Peter Boo Song Heng, who had served the Board for more
than nine years, resigned on 30 October 2014 and 02 January 2015 respectively to pave way for the admission of new
Directors to refresh the Board.
Board Performance
Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the
contribution by each director to the effectiveness of the Board.
The Board acknowledges the importance of a formal assessment of Board performance. It has adopted a formal
system of evaluating Board performance with the use of evaluation forms to assess the effectiveness of the Board
and Board Committees and the contribution by each Director. All Directors are required to complete the evaluation
questionnaire annually. The Company Secretary compiles the Directors’ responses to the evaluation forms into a
consolidated report. The report is reviewed at the NC meeting and then reported to the Board.
The evaluation of the Board’s performance as a whole deals with matters on Board composition, information
flow to the Board, Board procedures and Board accountability. Factors such as the structure, size and processes
of the Board and the Board’s access to information, management and the effectiveness of the Board’s oversight
of the Company’s performance are applied to evaluate the performance of the Board as a whole. The evaluation
of the Board Committees’ performance deals with the ideality of the size and composition of the committee,
responsibilities, resources and relevant expertise of each of the Directors, Board’s access of information, guidance
to and communication with the Management and the standard of conduct and performance of the Board’s principal
functions. The evaluation of the performance of an individual director deals with matters on an individual director’s
attendance at meetings, observance of the individual directors’ duties towards the Company and the individual
director’s know-how and interaction with fellow directors.
The evaluation of Board performance is conducted annually to identify areas of improvement and as a form of good
Board management practice. The last Board of Director’s evaluation was conducted in February 2015 and the results
have been presented to the NC for discussion. The NC is satisfied that the Board has been effective as a whole and
that each and every Director has contributed to the effective functioning of the Board and the Board Committees.
In addition, the NC is also satisfied that sufficient time and attention has been given by the Directors to the affairs of
the Company, notwithstanding that some of the directors have multiple board representations.
Access to Information
Principle 6: In order to fulfill their responsibilities, Board members should be provided with complete, adequate
and timely information prior to Board meetings and on an ongoing basis.
Management provides the Board with adequate and timely information as well as a review of the Group’s performance
prior to the Board meetings. The Board has separate and independent access to the Group’s senior management
including the CEO and other key management as well as the Group’s internal and external auditors should they have
any queries on the affairs of the Group.
As a general rule, board papers are sent to Directors one week in advance in order for Directors to be adequately
prepared for the meeting. As and when there are important matters that require the Directors’ attention, the
information will be furnished to the Directors as soon as practicable.
Should the Directors, whether as a group or individually, require independent professional advice, the Company will
bear the expenses incurred if such advice is required to enable the directors to discharge their duties professionally.
All Directors have separate and independent access to the advice and services of the Company Secretary. The
Company Secretary attends the Board and Board Committee meetings and is responsible for ensuring that Board
procedures are followed and that applicable rules and regulations (in particular the Companies Act and the SGX-ST
Listing Manual) are complied with. Under the direction of the Chairman, the Company Secretary is responsible for
ensuring good information flow within the Board and its committees and between Management and non-executive
Directors.
17
18
Pursuant to the Company’s AoA, the decision to appoint or remove the Company Secretary can only be taken by the
Board as a whole.
B. REMUNERATION MATTERS
Procedures for Developing Remuneration Policies
Principle 7: There should be a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual directors. No director should be involved
in deciding his own remuneration.
The Remuneration Committee (“RC”) is established for the purposes of ensuring that there is a formal and transparent
process for developing policy on executive remuneration and for fixing the remuneration packages of individual
directors and key executives. The RC comprises the following three Independent Directors:Mr Ang Mong Seng (Chairman)
Mr Hoon Ching Sing (Member, appointed on 01 October 2014)
Mr Yeoh Seng Huat Geoffrey (Member, appointed on 02 January 2015)
Mr Lim Kok Hoong (Member, resigned on 30 October 2014)
Mr Peter Boo Song Heng (Member, resigned on 02 January 2015)
The RC has adopted written terms of reference defining its membership, administration and duties. Duties and
responsibilities of the RC include:
(a)
to review and recommend to the Board a framework of remuneration for the Board and key executives;
(b)to review and determine specific remuneration packages for each Executive Director and the CEO which
should cover all aspects of remuneration including but not limited to directors’ fees, salaries, allowances,
bonuses, share-based compensation and benefits in kind;
(c)
to review and recommend to the Board the terms of renewal of service contracts of Directors;
(d)to retain such professional consultancy firm as the committee may deem necessary to enable it to discharge
its duties satisfactorily;
(e)
to consider various disclosure requirements for Directors’ remuneration, particularly those required by
regulatory bodies such as the SGX-ST, and ensure that there is adequate disclosure in the financial statements
to ensure and enhance transparency between the Company and relevant interested parties; and
(f)to carry out such other duties as may be agreed by the RC and the Board. The RC’s recommendations would
be made in consultation with the Chairman of the Board and submitted for endorsement by the entire Board
and no Director shall participate in decisions on his/her own remuneration.
Level and Mix of Remuneration
Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors
needed to run the company successfully but companies should avoid paying more than is necessary for this
purpose. A significant proportion of executive directors’ remuneration should be structured so as to link
rewards to corporate and individual performance.
It is the Group’s policy to set a level of remuneration that is appropriate to attract, retain and motivate the directors.
The Independent Directors receive directors’ fees in accordance with their level of contribution, taking into account
factors such as effort and time spent and responsibilities of the directors. The Board may, if it considers necessary,
consult experts on the remuneration of non-executive directors and would recommend the remuneration of the nonexecutive directors for approval at the AGM.
The RC had recommended to the Board an amount of S$140,000 as Directors’ fees to be paid to the Independent
Directors for the financial year ending 31 December 2015. These recommendations will be tabled for shareholders’
approval at the Company’s forthcoming AGM.
Each of the RC members had abstained from deliberating and voting on his own remuneration.
The Company has entered into a service agreement with each of the Executive Directors, namely Mr Kuah Geok Lin,
Mr Kuah Geok Khim and Mr Quah Yoke Hwee (collectively the “Appointees”). The service agreements contain noncompetition and non-solicitation clauses, which are binding on the Appointees during their period of employment
with the Company and for a period of 12 months after the cessation of their employment with the Company. The
Executive Directors do not receive directors’ fees. The remuneration of the Appointees comprises a fixed basic salary
component which includes the 13-month supplement and a variable component which includes an incentive bonus
(“Incentive Bonus”) at the end of every financial year of the Company based on the audited consolidated profit
before tax (before the Incentive Bonus) of our Group. The Appointees are also entitled to other benefits including
dental, optical and medical benefits, personal accident, hospitalization and surgical insurance and travelling and
entertainment expenses incurred for the purposes of our Group’s business.
The service agreements of the Appointees shall be subject to termination:
(i)
by the Company or any of the Appointees giving to the other at least three months’ written notice; or
(ii)without prior notice, upon the occurrence of certain specified events, including willful neglect in the discharge
of duties.
The Hoe Leong Performance Share Plan 2009 (“PSP 2009”) for the Group employees, including the Group Executive
Directors and the Hoe Leong Share Option Scheme 2009 (“ESOS 2009”) were approved by the shareholders of the
Company at an Extraordinary General Meeting held on 27 April 2009.
The Group employees including the Executive Directors are eligible to participate in the PSP 2009 and the ESOS
2009. More information on the PSP 2009 and ESOS 2009 are set out in the Directors’ Report.
The PSP 2009 and ESOS 2009 are components in the Group’s package of benefits and incentives to attract, retain and
motivate the Directors and employees, and to achieve better performance.
19
20
Disclosure on Remuneration
Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of
remuneration, and the procedure for setting remuneration, in the company’s annual report. It should
provide disclosure in relation to its remuneration policies to enable investors to understand the link between
remuneration paid to directors and key executives, and performance.
A breakdown showing the level and mix of each individual Director’s remuneration for the year ended 31 December
2014 is disclosed in the table below:
Name of Directors
Kuah Geok Lin(1)
Kuah Geok Khim(1)
Quah Yoke Hwee(1)
Lim Kok Hoong (2)
Ang Mong Seng
Peter Boo Song Heng
Hoon Ching Sing (3)
Remuneration
$420,000
$320,000
$260,000
$45,000
$40,000
$40,000
$15,000
Salary
(%)
Variable
bonus
(%)
84
85
85
–
–
–
–
7
7
7
–
–
–
–
Fees
(%)
Share–based
compensation
(%)
Other
benefits
(%)
Total
(%)
–
–
–
100
100
100
100
–
–
–
–
–
–
–
9
8
8
–
–
–
–
100
100
100
100
100
100
100
Notes:
(1) The Executive Directors, namely Mr Kuah Geok Lin, Mr Kuah Geok Khim and Mr Quah Yoke Hwee are siblings.
(2) Mr Lim Kok Hoong resigned on 30 October 2014 and his fee was pro-rated.
(3) Mr Hoon Ching Sing was appointed on 01 October 2014 and his remuneration was pro-rated.
The table below shows the level and mix of the remuneration of the Group’s 5 key executives (who are not directors)
for the financial year ended 31 December 2014:
Sn Name
1
2
3
4
5
Mdm Kuah Geok Khim (1)
Raymond Quah Eng Kiat
Alvin Kuah Han Zhou
Kelvin Kuah Zhichao
Teh Teong Lay
Remuneration
Band
$0 to $200,000
Salary
Variable
bonus
Other Benefits
& Allowances
CPF
Total
97%
82%
82%
80%
90%
0%
0%
0%
0%
0%
0%
6%
6%
7%
0%
3%
12%
12%
13%
10%
100%
100%
100%
100%
100%
For financial year ended 2014, the aggregate total remuneration paid to the top 5 key management personnel
amounts to S$620,000.
For financial year ended 2014, there was no termination and post employment benefits granted to the Directors,
the CEO and the top 5 key management personnel other than the standard contractual notice period termination
payment in lieu of service in respect of management employees.
Note:
(1)Mdm Kuah Geok Khim is the sister of the Executive Directors, namely Mr Kuah Geok Lin, Mr Kuah Geok Khim and Mr Quah
Yoke Hwee.
The table below shows the remuneration of the executives who are immediate family members of the Directors or the
CEO, whose remuneration exceeds $50,000 for the financial year ended 31 December 2014:Name
Relationship
Mdm Kuah Geok Khim
Sister of Messrs Kuah Geok Lin,
Operations Manager
Kuah Geok Khim and Quah
Yoke Hwee
Son of Mr Quah Yoke Hwee
Sales and Marketing Manager
Son of Mr Kuah Geok Lin
Son of Mr Kuah Geok Khim
Alvin Kuah Han Zhou
Kelvin Kuah Zhichao
C.
Position
Remuneration Band
$50,000 - $200,000
$50,000 - $200,000
$50,000 - $200,000
$50,000 - $200,000
ACCOUNTABILITY AND AUDIT
Accountability
Principle 10: The Board should present a balanced and understandable assessment of the company’s
performance, position and prospects.
One of the Board’s principal duties is to protect and enhance the long-term value and returns to the shareholders
of the Company. The accountability of the Board to the shareholders is demonstrated through the presentation of
the periodic financial statements as well as the timely announcements and news releases of significant corporate
developments and activities so that the shareholders can have a detailed explanation and balanced assessment of
the Group’s financial position and prospects.
The Management presents to the Audit Committee the quarterly and full-year results for its review and recommendation
to the Board for approval. The Board approves the results and authorizes the release of the results to the SGX-ST and
the public via SGXNET as required by the SGX-ST Listing Manual.
Negative assurance statements supported by two Executive Directors were issued to the Audit Committee to
accompany the Company’s quarterly financial results announcements, giving shareholders confirmation that to the
best of their knowledge, nothing had come to their attention that would render the Company’s quarterly financial
results false or misleading.
Risk Management and Internal Controls
Principle 11: The Board is responsible for the governance of risk. The Board should ensure the Management
maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and
the company’s assets, and should determine the nature and extent of the significant risks which the Board is
willing to take in achieving its strategic objectives.
Risk Management
The Board had assessed and decided not to establish a separate Board Risk Committee to carry out its responsibility
of helping the Board in the overseeing of the Group’s risk management framework and policies. Instead, this
responsibility is assumed by the Audit Committee.
The Company had set up the Enterprise Risk Management (“ERM”) system and framework with the help of an
external consultant in 2013. The ERM system and framework established was embedded in the internal control
system of the Group.
21
22
The external consultant will assist the Management to review and update the risk management framework on an
annual basis.
Internal Controls
The Board recognizes the importance of maintaining a sound system of internal controls to safeguard the
shareholders’ interest and investments and the Group’s assets. The Board recognises that no cost effective internal
control system can prevent all errors and irregularities, as a system is designed to manage rather than eliminate the
risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against
material misstatement or loss.
The Group has internal control systems and processes which it considers to be sufficient having regard to the size of
the Group and the complexity of its operations. The Board has also received written assurance from the Chairman
cum CEO and the Group Financial Controller (“GFC”) that the financial records have been properly maintained and
the financial statements give a true and fair view of the Company’s operations and finances and the Company risk
management and internal control systems in place are effective.
Based on the internal controls established and maintained by the Group, work performed by the internal and
external auditors, reviews performed by the Management, various Board Committees and the Board, and the written
assurance from the CEO and the GFC, the Board with the concurrence of the AC, is of the opinion that the Group’s
internal controls, addressing key financial, operational, compliance, and risk management systems were adequate
as at 31 December 2014. The Group will review its internal control systems and processes on an on-going basis and
make further improvements when necessary.
Audit Committee
Principle 12: The Board should establish an Audit Committee (“AC”) with written terms of reference which
clearly set out its authority and duties.
The AC comprises the following three Independent Directors:Mr Hoon Ching Sing (Chairman, appointed on 30 October 2014)
Mr Lim Kok Hoong (Chairman, resigned on 30 October 2014)
Mr Ang Mong Seng (Member)
Mr Yeoh Seng Huat Geoffrey (Member, appointed on 02 January 2015)
Mr Peter Boo Song Heng (Member, resigned on 02 January 2015)
The Board is of the view that the members of the AC are appropriately qualified, having accounting or related financial
management expertise or experience as the Board interprets such qualification, to discharge their responsibilities.
The AC assists the Board in discharging its responsibility to safeguard the Group’s assets, maintain adequate
accounting records, and develop and maintain effective systems of internal control, with the overall objective of
ensuring that the Management creates and maintains an effective control environment in the Group. The AC will also
review and supervise the internal audit functions of the Group.
The AC had met four times during the financial year and these meetings were attended by the GFC, and the External
Auditors. The AC also met once during the financial year with the external auditors, without the presence of any
Executive Director and Management personnel.
Our AC has adopted written terms of reference defining its membership, administration and duties. Duties and
responsibilities of the AC include:
(a)review with the external auditors the audit plan, their evaluation of the system of internal accounting controls,
their letter to management and the management’s response;
(b)review the financial statements of the Company including quarterly and full-year results before submission
to our Board for approval, focusing in particular on changes in accounting policies and practices, major risk
areas, significant adjustments resulting from the audit, compliance with accounting standards and compliance
with the SGX-ST Listing Manual and any other relevant statutory or regulatory requirements;
(c)review the scope and results of the audit and its cost effectiveness and the independence and objectivity of
the external auditors. Where the external auditors also supply a substantial volume of non-audit services to
the Company, the AC would keep the nature and extent of such services under review, seeking to balance the
maintenance of objectivity and value for money;
(d)review the internal control procedures and ensure co-ordination between the external auditors and our
management, and review the assistance given by our management to the external auditors, and discuss
problems and concerns, if any, arising from the interim and final audits, and any matters which the external
auditors may wish to discuss in the absence of our management at least annually;
(e)review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement of
any relevant laws, rules or regulations, which has or is likely to have a material impact on our Group’s operating
results or financial position, and our management’s response;
(f)
to review the independence and objectivity of the external auditors annually;
(g)consider the appointment or re-appointment of the external auditors and matters relating to the resignation
or dismissal of the external auditors;
(h)review interested person transactions (if any) falling within the scope of Chapter 9 of the SGX-ST Listing
Manual;
(i)
review potential conflicts of interest, if any;
(j)undertake such other reviews and projects as may be requested by the Board, and will report to the Board its
findings from time to time on matters arising and requiring the attention of the AC; and
(k)generally undertake such other functions and duties as may be required by statute or the SGX-ST Listing
Manual, or by such amendments as may be made thereto from time to time.
In the event that any Director has a personal material interest in any contract or proposed contract or arrangement,
he will abstain from reviewing that particular transaction or voting on the particular resolution.
The Company has put in place a whistle-blowing policy which is duly endorsed by the AC and approved by the Board.
Apart from the duties listed above, the AC shall commission and review the findings of internal investigations
into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any
Singapore law, rule or regulation which has or is likely to have a material impact on our Company’s operating results
and/or financial position.
In performing its functions, the AC has explicit authority to investigate any matter within its terms of reference, having
full access to and co-operation by management and full discretion to invite any director or executive officer to attend
meetings, and reasonable resources to enable it to discharge its function properly.
23
24
The AC has reviewed the independence of Company’s external auditors and is satisfied with the independence and
objectivity of the external auditors.
The aggregate amount of fees paid/ payable to the external auditors of the Company and other auditors of the
group companies for annual audit services were S$228,000 and S$113,000 respectively for the financial year ended 31
December 2014. There were no non-audit services provided by the external auditors of the Company for the financial
year ended 31 December 2014.
The AC has recommended the re-appointment of KPMG LLP as external auditors at the forthcoming AGM.
The Company has complied with Rules 712 and Rule 715 or 716 in relation to its auditors.
The AC members are kept abreast of the changes to accounting standards and issues which have a direct impact on
financial statements through periodic meetings with the external auditors.
Internal Audit
Principle 13: The company should establish an internal audit function that is independent of the activities it
audits.
The Company has engaged the services of an external consultant to perform its internal audit function.
The AC reviews annually the Internal Audit plan independent of the Management. The internal auditors report
directly to the Chairman of the AC on any material non-compliance and internal control weaknesses identified in the
course of audit.
The Board recognizes the importance of an internal audit function as an integral part of an effective system of good
corporate governance and will from time to time review and strengthen the existing control system.
D. SHAREHOLDER RIGHTS AND RESPONSIBILITIES
Shareholder Rights
Principle 14: Companies should treat all shareholders fairly and equitably and should recognise, protect and
facilitate the exercise of shareholders’ rights and continually review and update such governance arrangements.
The Group’s corporate governance culture and awareness promotes fair and equitable treatment of all shareholders.
All shareholders enjoy specific rights under the Singapore Companies Act, Chapter 50 and Articles of Association of
the Company. All shareholders are treated fairly and equitably.
The Group respects the equal information rights of all shareholders and is committed to the practice of fair,
transparent and timely disclosure.
Shareholders are given the opportunity to participate effectively and vote at general meetings of the Company,
where relevant rules and procedures governing the meetings are clearly communicated.
Communication with Shareholders
Principle 15: Companies should engage in regular, effective and fair communication with shareholders.
The Company endeavors to communicate regularly, effectively and fairly with its shareholders. Timely, as well as,
detailed disclosure is made to the public in compliance with SGX-ST guidelines. The Company does not practise
selective disclosure. Price sensitive information is first publicly released before the Company meets with any group
of investors or analysts.
Shareholders are kept informed of developments and performance of the Group through announcements published
via SGXNET and the press when necessary as well as in the annual report. Other announcements are also made on an
ad-hoc basis where applicable as soon as possible to ensure timely dissemination of the information to shareholders.
Principle 16: Companies should encourage greater shareholder participation at AGMs, and allow shareholders
the opportunity to communicate their views on various matters affecting the company.
All shareholders of the Company receive the annual report of the Company and notice of AGM within the prescribed
period. Participation of shareholders is encouraged at the Company’s general meetings. The Board of Directors
(including the Chairman of the respective Board committees), the Management, as well as the external auditors will
attend the Company’s AGM to address any questions that shareholders may have.
Each item of special business included in the notice of the meeting will be accompanied by an explanation of the
effects of a proposed resolution. Unless the resolution proposed at a meeting are interdependent and linked so
as to form one significant proposal, separate resolutions shall be proposed for substantially separate issues at the
meeting.
The Company will also prepare minutes of the general meetings that include substantial comments or queries from
shareholders and responses from the Board and Management, and will make such minutes or notes available to
shareholders upon their request.
E. DEALINGS IN SECURITIES
The Company has adopted the requirements in SGX-ST Rule 1207(19) applicable to dealings in the Company’s
securities by its Directors, management and officers. Directors, management and officers of the Group who have
access to price-sensitive, financial or confidential information are prohibited to deal in the Company’s shares during
the period commencing two (2) weeks before the announcement of the Company’s financial statements for each of
the first three quarters of its financial year and one (1) month before the announcement of the Company’s full-year
financial statements.
Directors, management and officers of the Group are also required to observe insider trading laws at all times even
when dealing in securities within the permitted trading period. In addition, the Directors, management and officers
of the Group are discouraged from dealing in the Company’s securities on short-term considerations.
F. INTERESTED PERSON TRANSACTIONS
The Company has adopted an internal policy governing procedures for the identification, approval and monitoring
of transactions with interested persons. All interested person transactions (“IPT”) are subject to review by the AC
every quarter to ensure that the relevant rules in Chapter 9 of the SGX-ST Listing Manual are complied with.
25
26
There were no IPT (each with a value of $100,000 or more) during the financial year ended 31 December 2014 except
as follows:
Name of interested person
Aggregate value of all interested Aggregate value of all interested
person transactions during the
person transactions conducted
financial year under review
during the financial year under
(excluding transactions less
review under shareholders’
than $100,000 and transactions
mandate pursuant to Rule 920
conducted under shareholders’
of the SGX-ST Listing Manual
mandate pursuant to Rule 920 of (excluding transactions less than
the SGX-ST Listing Manual)
$100,000)
$’000
$’000
Hoe Leong Plastic Industry (China) Ltd
– Rental expense
261
–
Hoe Leong (Co) Pte Ltd
– Interest payable on shareholder’s loan
183
–
The Company has not obtained a general mandate from shareholders for Interest Person Transactions.
G. MATERIAL CONTRACTS
Pursuant to Rule 1207(8) of the SGX-ST Listing Manual, the Company confirms that there was no material contract
entered into between the Company and its subsidiaries which involved the interests of any director or controlling
shareholder, either still subsisting at the end of the financial year or if not then subsisting, which was entered into
since the end of the previous financial year.
Financial Contents
Page
Directors’ Report
Statement by Directors
Independent Auditors’ Report
28-34
35
36-37
Statements of Financial Position
38
Statement of Profit or Loss
39
Statement of Comprehensive Income
40
Statement of Changes in Equity
Notes to the Financial Statements
41-42
43
44-96
27
28
Directors’ Report
Year ended 31 December 2014
We are pleased to submit this annual report to the members of the Company together with the audited financial
statements for the financial year ended 31 December 2014.
Directors
The directors in office at the date of this report are as follows:
Kuah Geok Lin
Quah Yoke Hwee
Kuah Geok Khim
Ang Mong Seng
Hoon Ching Sing
Yeoh Seng Huat Geoffrey
(Appointed on 1 October 2014)
(Appointed on 2 January 2015)
Directors’ interests
According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act,
Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including
those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company,
the ultimate holding company (Hoe Leong Co. (Pte.) Ltd.) and its other related corporations are as follows:
Name of director and corporation
in which interests are held
Kuah Geok Lin
The Company
Ordinary shares
- interests held
Options to subscribe for ordinary shares exercisable at:
- $0.39 between 27/04/2011 to 26/04/2020
- $0.39 between 27/04/2012 to 26/04/2020
Share awards:
- vesting on 05/05/2013
- vesting on 05/05/2014
Ultimate Holding Company
Ordinary shares
- interests held
Subsidiary - PT Trackspare
Ordinary shares of US$1,000 each fully paid
- interests held
Holdings
at beginning
of the year/date
of appointment
Holdings
at end
of the year
8,860,924
15,506,617
50,000
50,000
50,000
50,000
147,050
147,050
147,050
147,050
370,951
370,951
5
5
Directors’ Report
Directors’ interests (cont’d)
Name of director and corporation
in which interests are held
Quah Yoke Hwee
The Company
Ordinary shares
- interests held
- $0.39 between 27/04/2011 to 26/04/2020
- $0.39 between 27/04/2012 to 26/04/2020
Share awards:
- vesting on 05/05/2013
- vesting on 05/05/2014
Ordinary shares
- interests held
Kuah Geok Khim
The Company
Ordinary shares
- interests held
- $0.39 between 27/04/2011 to 26/04/2020
- $0.39 between 27/04/2012 to 26/04/2020
Share awards:
- vesting on 05/05/2013
- vesting on 05/05/2014
Ordinary shares
- interests held
Ang Mong Seng
The Company
Ordinary shares
- interests held
- $0.42 between 13/04/2011 to 12/04/2015
- $0.42 between 13/04/2012 to 12/04/2015
Holdings
at beginning
of the year/date
of appointment
Holdings
at end
of the year
8,750,924
15,314,117
50,000
50,000
50,000
50,000
51,450
51,450
51,450
51,450
370,951
370,951
8,750,924
15,314,117
50,000
50,000
50,000
50,000
58,800
58,800
58,800
58,800
370,951
370,951
100,000
100,000
25,000
25,000
25,000
25,000
29
30
Directors’ Report
Directors’ interests (cont’d)
Kuah Geok Lin, Quah Yoke Hwee and Kuah Geok Khim have the following deemed interests in the Company:
The Company
Ordinary shares
- interests held
Holdings
at beginning
of the year
Holdings
at end
of the year
Holdings
at 21 January
2015
171,268,200
323,749,267
323,749,267
Except as disclosed above, there were no changes in any of the above mentioned interests in the Company between
the end of the financial year and 21 January 2015.
By virtue of Section 7 of the Act, Kuah Geok Lin, Quah Yoke Hwee and Kuah Geok Khim are deemed to have an
interest in all the other wholly-owned subsidiaries of Hoe Leong Co. (Pte.) Ltd., at the beginning and at the end of
the financial year.
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares,
debentures, warrants or share options of the Company or of related corporations, either at the beginning of the
financial year or date of appointment if later, or at the end of the financial year.
Except as disclosed under the “Share options and awards” section of this report, neither at the end of, nor at any
time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose
objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or
debentures of the Company or any other body corporate.
Except for salaries, bonuses and fees and those benefits that are disclosed in the notes to the financial statements,
since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of
a contract made by the Company or a related corporation with the director, or with a firm of which he is a member,
or with a company in which he has a substantial financial interest.
Share options and awards
The Hoe Leong Share Option Scheme 2009 (“ESOS 2009”) and the Hoe Leong Performance Share Plan 2009 (“PSP
2009”) of the Company were approved and adopted by its members at an Extraordinary General Meeting held on
27 April 2009.
Share options
The ESOS 2009 is administered by the Remuneration Committee whose members are as follows:
Ang Mong Seng Hoon Ching Sing
Yeoh Seng Huat Geoffrey
(Chairman)
(Member)
(Member)
(Appointed on 1 October 2014)
Directors’ Report
Share options and awards (cont’d)
Share options (cont’d)
Information regarding the ESOS 2009 is set out below:
•
The exercise price of the options can be set at a discount to the market price not exceeding 20% of the market
price in respect of options granted at the time of grant.
•
For options granted to directors, 50% of the options can be exercised after one year from the date of grant
and the remaining 50% of the options can be exercised after two years from the date of grant.
•
For options granted to employees, 50% of the options can be exercised after two years from the date of grant
and the remaining 50% of the options can be exercised after three years from the date of grant.
•
The options granted to executive directors and employees will expire after 10 years from the date of grant.
•
The options granted to non-executive directors will expire after five years from the date of grant.
Options granted, exercised / cancelled, and outstanding are set out below:
There were no options granted, exercised or cancelled during the financial year. Outstanding options at the end of
the financial year under the ESOS 2009, on the unissued ordinary shares of the Company, are as follows:
Date of grant
of options
Exercise
price
per share
$
13 April 2010
13 April 2010
27 April 2010
27 April 2010
5 May 2011
31 May 2012
0.42
0.34*
0.39
0.31*
0.23*
0.15*
Options outstanding at
1 January 2014 and 31
December 2014
150,000
250,000
350,000
130,000
50,000
231,000
1,161,000
Number of
option holders at
31 December
2014
3
4
4
2
1
5
Exercise period
13 April 2011 to 12 April 2015
5 May 2013 to 4 May 2021
31 May 2014 to 30 May 2022
*These options were granted to the employees of the Group at a 20% discount to the average closing market price of the
Company’s shares for the last five trading days immediately preceding the date of grant.
31
32
Directors’ Report
Share options (cont’d)
Aggregate options granted to directors and associates of controlling shareholders of the Company are as follows:
Name of Participant
Directors
Kuah Geok Lin
Quah Yoke Hwee
Kuah Geok Khim
Ang Mong Seng
Associates of controlling
shareholders
Kuah Geok Koon
Mdm Kuah Geok Khim
Alvin Kuah Han Zhou
Options
granted during
the financial
year ended
31 December
2014
(’000)
Aggregate
options
granted since
commencement
of ESOS 2009 to
31 December
2014
(’000)
Aggregate
options exercised/
cancelled since
commencement
of ESOS 2009 to
31 December
2014
(’000)
Aggregate
options
outstanding at
31 December
2014
(’000)
–
–
–
–
100
100
100
50
–
–
–
–
100
100
100
50
–
–
–
–
–
50
154
77
77
708
–
–
–
–
–
50
154
77
77
708
Except as disclosed above, there were no unissued shares of the Company or its subsidiaries under options granted
by the Company or its subsidiaries as at the end of the financial year.
Share awards
Participants under the PSP 2009 will receive fully paid shares free of charge, upon the participants satisfying the
criteria set out in the PSP 2009. For share awards granted under the PSP 2009, 50% of the share awards will vest after
two years from the date of grant and the remaining 50% of the share awards will vest after three years from the date
of grant. The number of shares to be allocated to each participant will be determined at the end of the performance
period based on the level of attainment of the performance targets and the prevailing market price of the Company’s
shares at the date of grant.
Details of the share awards granted, vested or cancelled during the financial year under the PSP 2009 are as follows:
Date of grant of
share awards
6 May 2011
31 May 2012
Share
awards outstanding at
1 January 2014
632,200
90,000
722,200
Share
awards
cancelled/lapsed
(316,100)
–
(316,100)
Share
awards outstanding at
31 December 2014
316,100
90,000
406,100
Directors’ Report
Share awards (cont’d)
Aggregate share awards granted to directors and associates of controlling shareholders of the Company are as
follows:
Name of Participant
Directors
Kuah Geok Lin
Quah Yoke Hwee
Kuah Geok Khim
Associates of controlling
shareholders
Mdm Kuah Geok Khim
Alvin Kuah Han Zhou
Aggregate
share awards
vested/
cancelled since
commencement
of PSP 2009 to
31 December
2014
Share awards
granted during the
financial
year ended
31 December
2014
Aggregate
share awards
granted since
commencement
of PSP 2009 to
31 December
2014
–
–
–
147,050
51,450
58,800
–
–
–
294,100
102,900
117,600
–
–
–
–
81,400
33,700
33,700
406,100
–
–
–
–
110,800
48,400
48,400
722,200
Aggregate
share awards
outstanding at
31 December
2014
The aggregate number of shares available under the ESOS 2009 and the PSP 2009 (collectively, the “Schemes”) must
not exceed 15% of the total number of issued shares (excluding treasury shares) from time to time.
Since the commencement of the Schemes, no participant under the Schemes has been granted 5% or more of the
total number of shares available under the Schemes.
Audit Committee
The members of the Audit Committee at the date of this report are:
•
•
•
Hoon Ching Sing (Chairman), non-executive director
Ang Mong Seng, non-executive director
Yeoh Seng Huat Geoffrey, non-executive director (Appointed on 1 October 2014)
The Audit Committee performs the functions specified in Section 201B of the Act, the SGX-ST Listing Manual and
the Code of Corporate Governance.
The Audit Committee has held four meetings since the last directors’ report. In performing its functions, the
Audit Committee met with the Company’s external auditors to discuss the scope of their work, the results of their
examination and evaluation of the Company’s internal accounting control system. The Company’s internal audit
function has been outsourced and the Audit Committee has discussed the scope of the work with the appointed firm,
the results of their examination and their evaluation of the Company’s internal accounting system, where appropriate.
33
34
Directors’ Report
Audit Committee (cont’d)
The Audit Committee also reviewed the following:
•
assistance provided by the Company’s officers to the internal and external auditors;
•
quarterly financial information and annual financial statements of the Group and the Company prior to their
submission to the directors of the Company for adoption; and
•
interested person transactions (as defined in Chapter 9 of the SGX-ST Listing Manual).
The Audit Committee has full access to management and is given the resources required for it to discharge its
functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings.
The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and
non-audit fees.
The Audit Committee is satisfied with the independence and objectivity of the external auditors and has
recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors
at the forthcoming Annual General Meeting of the Company.
In appointing the auditors for the Company, its subsidiaries and significant associates, the Company has complied
with Rule 712 and 715 of the SGX-ST Listing Manual.
Auditors
The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.
On behalf of the Board of Directors
Kuah Geok Lin
Director
Quah Yoke Hwee
Director
8 April 2015
Statement by Directors
In our opinion:
(a)the financial statements set out on pages 38 to 96 are drawn up so as to give a true and fair view of the state
of affairs of the Group and of the Company as at 31 December 2014 and the results, changes in equity and
cash flows of the Group for the year ended on that date, in accordance with the provisions of the Singapore
Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and
(b)at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they fall due on the basis as stated in Note 2 to the financial statements.
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
On behalf of the Board of Directors
Kuah Geok Lin
Director
Quah Yoke Hwee
Director
8 April 2015
35
36
To the Members of the Company Hoe Leong Corporation Ltd
Report on the financial statements
We have audited the accompanying financial statements of Hoe Leong Corporation Ltd. (“the Company”) and its
subsidiaries (“the Group”), which comprise the statements of financial position of the Group and the Company as
at 31 December 2014, the statement of profit or loss, statement of comprehensive income, statement of changes in
equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting
policies and other explanatory information, as set out on pages 38 to 96.
Management’s responsibility for the financial statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance
with the provisions of the Singapore Companies Act, Chapter 50 (“the Act”) and Singapore Financial Reporting
Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a
reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions
are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and
loss accounts and balance sheets and to maintain accountability of assets.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and
fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
To the Members of the Company Hoe Leong Corporation Ltd
Opinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position of the
Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting
Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2014
and the results, changes in equity and cash flows of the Group for the year ended on that date.
Report on other legal and regulatory requirements
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those
subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the
provisions of the Act.
KPMG LLP
Public Accountants and
Chartered Accountants
Singapore
8 April 2015
37
38
Statements of Financial Position
As at 31 December 2014
Group
Assets
Property, plant and equipment
Investments in subsidiaries
Investments in associates
Deferred tax assets
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Non-current assets held for disposal
Current assets
Total assets
Equity
Share capital
Treasury shares
Currency translation reserve
Share-based compensation reserve
Accumulated (losses)/profits
Equity attributable to owners
of the Company
Non-controlling interests
Total equity
Liabilities
Financial liabilities
Loan from non-controlling shareholder of a
subsidiary
Deferred income
Deferred tax liabilities
Non-current liabilities
Trade and other payables
Deferred income
Current liabilities
Total liabilities
Total equity and liabilities
Company
Note
2014
$’000
2013
$’000
2014
$’000
2013
$’000
5
6
7
8
82,303
–
–
578
82,881
45,585
–
12,549
624
58,758
3,564
26,919
–
–
30,483
3,822
35,374
721
–
39,917
9
10
11
12
32,113
48,202
6,043
–
86,358
169,239
32,226
50,544
10,983
21,291
115,044
173,802
13,411
99,801
1,631
–
114,843
145,326
17,090
77,521
6,445
20,088
121,144
161,061
13
63,870
(50)
(3,391)
342
(4,952)
53,897
(40)
(4,102)
322
17,855
63,870
(50)
–
342
2,225
53,897
(40)
–
322
16,426
55,819
(1,609)
54,210
67,932
(1,106)
66,826
66,387
–
66,387
70,605
–
70,605
16
9,679
21,187
100
18,446
17
18
8
3,334
2,340
711
16,064
3,397
7,537
774
32,895
–
2,340
19
2,459
–
7,537
20
26,003
19
16
18
22,941
70,828
5,196
98,965
115,029
169,239
20,749
48,136
5,196
74,081
106,976
173,802
12,160
59,124
5,196
76,480
78,939
145,326
16,063
14
15
The accompanying notes form an integral part of these financial statements.
43,194
5,196
64,453
90,456
161,061
Statement of Profit or Loss
Group
Note
Revenue
Cost of sales
Gross profit
Other income
Profit earned from construction of property
Distribution expenses
Administrative expenses
Other expenses
Results from operating activities
20
2014
$’000
2013
$’000
66,426
(56,762)
9,664
637
–
(5,592)
(7,194)
(6,621)
(9,106)
70,962
(56,963)
13,999
3,476
152
(5,385)
(7,993)
(7,835)
(3,586)
45
(1,585)
(1,540)
Finance income
Finance costs
Net finance costs
21
26
(1,597)
(1,571)
Share of results of associates, net of tax
7
(12,382)
(10,726)
Loss before income tax
Income tax (expense)/credit
Loss for the year
22
23
(23,059)
(275)
(23,334)
(15,852)
64
(15,788)
(22,807)
(527)
(23,334)
(13,441)
(2,347)
(15,788)
(7.47)
(7.47)
(4.65)
(4.65)
Loss attributable to:
Owners of the Company
Loss for the year
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
24
24
39
40
Statement of Comprehensive Income
Group
2014
$’000
2013
$’000
Loss for the year
(23,334)
(15,788)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences arising from
foreign operations
Other comprehensive income, net of income tax
Total comprehensive income for the year
735
735
(22,599)
1,449
1,449
(14,339)
Total comprehensive income attributable to:
Owners of the Company
(22,096)
(503)
(22,599)
(12,060)
(2,279)
(14,339)
Group
At 1 January 2013
Loss for the year
foreign operations
Transactions with owners, recorded directly in
equity
Own shares acquired
Share-based compensation expense
Total contributions by and distributions
to owners
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests without a
change in control
Total transactions with owners
At 31 December 2013
–
–
–
–
(40)
–
(40)
–
(40)
(40)
53,897
–
–
–
–
–
–
–
–
53,897
–
62
322
62
–
62
–
–
–
260
–
–
(4,102)
–
–
–
1,381
1,381
–
(5,483)
1,402
1,402
17,855
–
–
–
–
(13,441)
(13,441)
29,894
1,402
1,424
67,932
22
(40)
62
1,381
(12,060)
(13,441)
78,568
(4,124)
(4,124)
(1,106)
–
–
–
68
(2,279)
(2,347)
5,297
<---------------------------- Attributable to owners of the Company ---------------------------->
Share-based
Currency
NonShare
Treasury compensation translation Accumulated
controlling
capital
shares
reserve
reserve
profits
Total
interests
$’000
$’000
$’000
$’000
$’000
$’000
$’000
(2,722)
(2,700)
66,826
22
(40)
62
1,449
(14,339)
(15,788)
83,865
Total
equity
$’000
41
Group
At 1 January 2014
Loss for the year
foreign operations
Transactions with owners, recorded directly in
equity
Contributions by and distributions
to owners
Issue of ordinary shares
Own shares acquired
Share-based compensation expense
Total contributions by and distributions
to owners
At 31 December 2014
(40)
–
–
–
–
(10)
–
(10)
(50)
53,897
–
–
–
9,973
–
–
9,973
63,870
20
342
–
–
20
–
–
–
322
–
(3,391)
–
–
–
711
711
–
(4,102)
–
(4,952)
–
–
–
–
(22,807)
(22,807)
17,855
9,983
55,819
9,973
(10)
20
711
(22,096)
(22,807)
67,932
–
(1,609)
–
–
–
24
(503)
(527)
(1,106)
<---------------------------- Attributable to owners of the Company ---------------------------->
Share-based
Currency Accumulated
NonShare
Treasury compensation translation
profits/
controlling
capital
shares
reserve
reserve
(losses)
Total
interests
$’000
$’000
$’000
$’000
$’000
$’000
$’000
9,983
54,210
9,973
(10)
20
735
(22,599)
(23,334)
66,826
Total
equity
$’000
42
Note
Operating activities
Adjustments for:
Amortisation of deferred income
Depreciation of property, plant and equipment
Finance income
Finance costs
Share of results of associates, net of tax
Property, plant and equipment written off
Gain on disposal of property, plant and equipment
Equity-settled share-based compensation
Impairment loss on investment in joint ventures
Impairment loss on property, plant and equipment
Others
Operating cash flows before changes in working capital
Changes in working capital:
Inventories
Cash (used in)/generated from operations
Income taxes paid
Cash flows (used in)/from operating activities
Investing activities
Acquisition of interests in associates and joint ventures
Finance income received
Purchase of property, plant and equipment
Proceeds from sale of leasehold property
Proceeds from disposal of property, plant and equipment
Loans to associates
Cash flows (used in)/from investing activities
Financing activities
Finance costs paid
Proceeds from bills payable and trust receipts
Proceeds from finance lease liabilities
Payment of finance lease liabilities
Proceeds from interest-bearing borrowings
Repayment of interest-bearing borrowings
Purchase of treasury shares
Proceeds from issuance of ordinary shares
Acquisition of non-controlling interests in subsidiaries
Cash flows from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations
Cash and cash equivalents at end of the year
18
5
21
21
22
22
22
22
22
21
21
13
11
2014
$’000
Group
2013
$’000
(23,059)
(15,852)
(5,197)
4,174
(26)
1,597
12,382
64
–
(41)
20
–
985
–
(9,101)
(5,139)
3,081
(45)
1,585
10,726
3
(152)
(131)
62
500
–
24
(5,338)
113
2,317
(4,336)
(11,007)
(396)
(11,403)
7,082
51
8,047
9,842
(306)
9,536
–
26
(11,093)
–
411
–
(10,636)
(721)
45
(4,231)
21,028
291
(10,528)
5,884
(1,597)
(1,207)
192
(123)
45,330
(34,881)
(10)
9,973
–
17,677
(1,585)
(1,609)
–
(116)
42,455
(49,518)
(40)
–
(6,203)
(16,616)
(4,362)
10,983
(578)
6,043
(1,196)
11,192
987
10,983
Significant non-cash transaction
During the year, the Group acquired two vessels amounting to $28,263,000 from previously held joint venture entities
pursuant to a deed of settlement entered between the Company, the previously held joint venture entities and the
joint venture partner. Please see notes 5 and 12 for details.
43
44
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Board of Directors on 8 April 2015.
1
Domicile and activities
Hoe Leong Corporation Ltd. (the Company) is incorporated in the Republic of Singapore. The address of the
Company’s registered office is at 6 Clementi Loop, Singapore 129814.
The principal activities of the Group and of the Company are those relating to designing, manufacturing, sale
and distribution of machinery parts. The Group is also engaged in vessel chartering business.
The immediate and ultimate holding company during the financial year is Hoe Leong Co. (Pte.) Ltd., a
company incorporated in the Republic of Singapore.
2
Going concern
The Group incurred a net loss of S$23,334,000 for the year ended 31 December 2014 and the Group’s current
liabilities are in excess of its current assets by S$12,607,000 as at 31 December 2014.
Notwithstanding the above, the financial statements have been prepared on a going concern basis as the
Directors of the Company consider that it is appropriate for the Company to prepare its financial statements
on a going concern basis because the Company has:
(i)sufficient cash flows based on the Group’s approved cash flow forecast for the next twelve months to
meet liabilities as and when they fall due;
(ii)available unutilised banking facilities amounting to S$19,100,000 for its working capital requirements
for the next twelve months; and
(iii)received an undertaking from the holding company to continue to provide the Company with financial
and other support as is necessary for the next twelve months to enable the Group and Company to
continue operations and to meet its liabilities as and when they fall due.
3
Basis of preparation
(a)
Statement of compliance
The financial statements have been prepared in accordance with Singapore Financial Reporting Standards
(FRS).
(b)
Basis of measurement
The financial statements have been prepared on the historical cost basis except as otherwise described in
accounting policies below.
3
Basis of preparation (cont’d)
(c)
Functional and presentation currency
The financial statements are presented in Singapore dollars, which is the Company’s functional currency. All
financial information presented in Singapore dollars have been rounded to the nearest thousand, unless
otherwise stated.
(d)
Change in accounting policies
Subsidiaries
As a result of FRS 110 Consolidated Financial Statements, the Group has changed its accounting policy for
determining whether it has control over and consequently whether it consolidates its investees. FRS 110
introduces a new control model that focuses on whether the Group has power over an investee, exposure
or rights to variable returns from its involvement with the investee and ability to use its power to affect those
returns. Notwithstanding the above, the change had no impact to the control conclusion made by the Group.
Disclosure of interests in other entities
From 1 January 2014, as a result of FRS 112 Disclosure of Interests in Other Entities, the Group has expanded
its disclosure about its interest in subsidiaries.
Disclosure of recoverable amount for non-financial assets
FRS 36 Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets requires the Group
to disclose the recoverable amount for non-financial assets when they are based on fair value less costs of
disposals and an impairment is recognised.
The adoption of FRS 36 has no impact on the recognised assets, liabilities and comprehensive income of the
Group.
Offsetting of financial assets and financial liabilities
Under the Amendments to FRS 32 Financial Instruments: Presentation – Offsetting Financial Assets and
Financial Liabilities, to qualify for offsetting, the right to set off a financial asset and a financial liability must
not be contingent on a future event and must be enforceable both in the normal course of business and in
the event of default, insolvency or bankruptcy of the entity and all counterparties.
The adoption of the amendment to FRS 32 has no impact on the recognised assets, liabilities and
comprehensive income of the Group.
(e)
Use of estimates and judgements
The preparation of the financial statements in conformity with FRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected.
45
46
3
Basis of preparation (cont’d)
(e)
Use of estimates and judgements (cont’d)
Information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are as
follows:
•
Note 5 – measurement of depreciation of property, plant and equipment. Assets are depreciated on
a straight-line basis over their estimated useful lives. Management estimates the useful lives of these
assets to be within 3 to 50 years. Changes in the expected level of usage could impact the economic
useful lives and the residual values of these assets, therefore future depreciation charges could be
revised.
•
Note 6 and 7 – impairment of investments in subsidiaries and associates. Investments in subsidiaries
and associates are assessed to determine whether they are impaired by assessing the factors that
affect the recoverable amount of an investment, and the financial health of and business outlook for
the investee. These include factors such as industry and sector performance, changes in technology,
and operating and financing cash flows.
•
Note 7 – Use of unaudited results for equity accounting. The Group’s share of the post acquisition
results of its associates and joint ventures is based on their respective unaudited financial statements,
with such adjustments as considered appropriate for the Group’s equity accounting purposes. Unless
materially different, any changes to the share of results will be adjusted in future periods.
•
Note 9 – measurement of net realisable value of inventories. Inventories have been written down to
estimated net realisable value to be consistent with the view that assets should not be carried in excess
of amounts expected to be realised from their sale or use. These estimates take into consideration
market demand, the age of the inventory, competition, selling price and events occurring after the end
of the financial year to the extent that such events confirm conditions that existed at reporting date.
•
Note 10 – measurement of recoverable amounts of loans and receivables. The Group evaluates
whether there is any objective evidence that loans and receivables are impaired, and determines
the amount of impairment losses as a result of the inability of the customers or counter-parties to
make required payments. The Group determines the estimates based on the aging of the loans
and receivables, credit-worthiness of customers or counter-parties, future collectability of loans and
receivables and historical write-off experience of loans and receivables. If the financial condition of the
customers or counter-parties were to deteriorate, actual write-offs could be higher than estimated.
•
Note 24 – measurement of income taxes. The Group is subject to income taxes in a number of
jurisdictions and significant judgement is involved in determining the group-wide provision for income
taxes. The ultimate tax liability takes time to finalise in the ordinary course of business. The Group
recognises liabilities for expected tax issues based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is different from the amounts that were initially
recognised, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made.
4
Significant accounting policies
The accounting policies set out below have been applied consistently by the Group to all periods presented
in these financial statements, and have been applied consistently by Group entities.
(a)
Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method in accordance with FRS 103 Business
Combination as at the acquisition date, which is the date on which control is transferred to the Group.
The Group measures goodwill at the acquisition date as:
•
the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interests in the acquiree; plus
•
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the
acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Any goodwill that arises is tested annually for impairment. When the excess is negative, a bargain purchase is
recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss.
Any contingent consideration payable is recognised at fair value at the acquisition date and included in the
consideration transferred. If the contingent consideration is classified as equity, it is not re-measured and
settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in profit or loss.
When share-based payment awards (replacement awards) are exchanged for awards held by the acquiree’s
employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s
replacement awards is included in measuring the consideration transferred in the business combination. This
determination is based on the market-based value of the replacement awards compared with the marketbased value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or
future service.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
share of the acquiree’s net assets in the event of liquidation are measured either at fair value or at the noncontrolling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets,
at the acquisition date. The measurement basis taken is elected on a transaction-by-transaction basis. All
other non-controlling interests are measured at acquisition-date fair value, unless another measurement basis
is required by FRSs.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that
the Group incurs in connection with a business combination are expensed as incurred.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as
transactions with owners in their capacity as owners and therefore no adjustments are made to goodwill and
no gain or loss is recognised in profit or loss. Adjustments to non-controlling interests arising from transactions
that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.
47
48
4
Significant accounting policies (cont’d)
(a)
Basis of consolidation (cont’d)
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed where necessary to align with the policies adopted
by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the noncontrolling interests even if doing so causes the non-controlling interests to have a deficit balance.
Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the
loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as
an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence
retained.
Investments in associates (equity-accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over their financial
and operating policies. Significant influence is presumed to exist when the Group holds 20% or more of the
voting power of another entity.
Investments in associates are accounted for using the equity method (equity-accounted investees) and
are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the
consolidated financial statements include the Group’s share of the profit or loss and other comprehensive
income of the equity-accounted investees, after adjustments to align the accounting policies of the equityaccounted investees with those of the Group, from the date that significant influence commences until the
date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount
of that interest, together with any long-term interests that form part thereof, is reduced to zero, and the
recognition of further losses is discontinued except to the extent that the Group has an obligation to fund the
investee’s operations or has made payments on behalf of the investee.
Acquisition of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity
as owners and therefore no goodwill is recognised as a result of such transactions. Adjustments to noncontrolling interests arising from transactions that do not involve a change of control are based on a
proportionate amount of the net assets of the subsidiary. Any differences between the adjustment to noncontrolling interests and the fair value of consideration paid is recognised directly in equity and presented as
part of equity attributable to owners of the Company.
4
(a)
Basis of consolidation (cont’d)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with associates and joint ventures are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but
only to the extent that there is no evidence of impairment.
Subsidiaries and associates in the separate financial statements
Investments in subsidiaries and associates are stated in the Company’s statement of financial position at cost
less accumulated impairment losses.
(b)
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate
at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in
the functional currency at the beginning of the year, adjusted for effective interest and payments during the
year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using
the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates at the
end of the reporting period. The income and expenses of foreign operations are translated to Singapore
dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the currency
translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign
operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount
in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or
loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign
operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When the Group disposes of only part of its investment in an associate or joint venture
that includes a foreign operation while retaining significant influence or joint control, the relevant proportion
of the cumulative amount is reclassified to profit or loss.
49
50
4
(b)
Foreign currency (cont’d)
Foreign operations (cont’d)
When the settlement of a monetary item receivable from or payable to a foreign operation is neither
planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a
monetary item are considered to form part of a net investment in a foreign operation are recognised in other
comprehensive income, and are presented in the currency translation reserve in equity.
(c)
Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All
other financial assets (including assets designated at fair value through profit or loss) are recognised initially
on the trade date, which is the date that the Group becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither
transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over
the transferred assets. Any interest in transferred financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into loans and receivables.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective
interest method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents, and trade and other receivables.
Cash and cash equivalents comprise cash in hand and bank balances.
4
(c)
Financial instruments (cont’d)
Non-derivative financial liabilities
Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially
on the trade date, which is the date that the Group becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or
expire.
Financial liabilities for contingent consideration payable in a business combination are initially measured at
fair value. Subsequent changes in the fair value of the contingent consideration are recognised in profit or
loss.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured at amortised cost using the effective interest
method.
Other financial liabilities comprise loans and borrowings, and trade and other payables.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
are recognised as a deduction from equity, net of any tax effects.
Repurchase, disposal and reissue of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of consideration paid, which includes
directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased
shares are classified as treasury shares and are presented in the reserve for own share account. When treasury
shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the
remitting surplus or deficit on the transaction is presented in non-distributable capital reserve.
Derivative financial instruments
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are recognised initially at fair value; any attributable transaction costs are recognised in profit or
loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein
are recognised in profit or loss.
51
52
4
(c)
Financial instruments (cont’d)
Intra-group financial guarantees
Financial guarantees are financial instruments issued by the Group that require the issuer to make specified
payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when
due in accordance with the original or modified terms of a debt instrument.
Financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent
to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative
amortisation and the amount that would be recognised if they were accounted for as contingent liabilities.
When financial guarantees are terminated before their original expiry date, the carrying amount of the
financial guarantee is transferred to profit or loss.
(d)
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes:
•
•
•
•
the cost of materials and direct labour;
ny other costs directly attributable to bringing the assets to a working condition for their intended
a
use;
when the Group has an obligation to remove the asset or restore the site, an estimate of the costs of
dismantling and removing the items and restoring the site on which they are located; and
capitalised borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between
the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will
flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component
is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in
profit or loss as incurred.
4
(d)
Property, plant and equipment (cont’d)
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed and if a component has a useful life that is different from the remainder of that asset, that
component is depreciated separately.
Depreciation is recognised as an expense in profit or loss on a straight-line basis over the estimated useful
lives of each component of an item of property, plant and equipment. Leased assets are depreciated over
the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Freehold land is not depreciated.
The estimated useful lives for the current and comparative years are as follows:
Freehold building –
50 years
Furniture, fittings and office equipment –
5 to 10 years
Material handling equipment
–
5 to 10 years
Computers–
3 years
Motor vehicles–
5 years
Barge and vessel
–
20 to 25 years
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and
adjusted if appropriate.
(e)
Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset
is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and are not recognised in the Group’s statement of financial position.
(f)Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is calculated
using the weighted average cost method, and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to their existing location and
condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share
of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and estimated costs necessary to make the sale.
53
54
4
(g)Impairment
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss, including an interest in associate and joint
venture, is assessed at the end of each reporting period to determine whether there is objective evidence
that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event(s) has occurred
after the initial recognition of the asset, and that the loss event(s) has an impact on the estimated future cash
flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor,
restructuring of an amount due to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers
or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active
market for a security.
The Group considers evidence of impairment for loans and receivables at both a specific asset and collective
level. All individually significant loans and receivables are assessed for specific impairment. All individually
significant receivables found not to be specifically impaired are then collectively assessed for any impairment
that has been incurred but not yet identified. Loans and receivables that are not individually significant are
collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing
of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows, discounted at the
asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance
account against loans and receivables. Interest on the impaired asset continues to be recognised. When the
Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written
off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised, then the previously recognised impairment loss is
reversed through profit or loss.
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets,
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the
carrying amount of an asset or its related cash-generating unit (CGU) exceeds the estimated recoverable
amount.
4
(g)
Impairment (cont’d)
Non-financial assets (cont’d)
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the
purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that
the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for
internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that
are expected to benefit from the synergies of the combination.
The Group’s corporate assets that do not generate separate cash inflows and are utilised by more than one
CGU are not significant. Corporate assets are allocated to CGUs on a reasonable and consistent basis and are
tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then
to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
Goodwill that forms part of the carrying amount of an investment in an associate or joint venture is not
recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount
of the investment in an associate or joint venture is tested for impairment as a single asset when there is
objective evidence that the investment in the associate or joint venture may be impaired.
(h)
Non-current assets, or disposal groups comprising assets and liabilities, that are highly probable to be recovered
primarily through sale rather than through continuing use, are classified as held for sale. Immediately before
classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance
with the Group’s accounting policies. Thereafter, the assets, or disposal group, are generally measured at the
lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is
first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is
allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which continue to
be measured in accordance with the Group’s accounting policies.
Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses
on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative
impairment loss.
55
56
4
(h)
Non-current assets held for disposal (cont’d)
Property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated.
In addition, equity accounting of associates and joint ventures ceases once classified as held for sale or
distribution.
(i)
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution pension plans are recognised as an employee benefit
expense in profit or loss in the periods during which services are rendered by employees.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee, and the obligation can be estimated reliably.
Share-based compensation transactions
The grant date fair value of equity-settled share-based compensation awards granted to employees
is recognised as an employee expense, with a corresponding increase in equity, over the period that the
employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted
to reflect the number of awards for which the related service and non-market vesting conditions are expected
to be met, such that the amount ultimately recognised as an expense is based on the number of awards
that meet the related service and non-market performance conditions at the vesting date. For share-based
compensation awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual
outcomes.
(j)Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as finance cost.
4
(k)Revenue
Sale of goods
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the
consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is
recognised when significant risks and rewards of ownership have been transferred to the customer, recovery
of the consideration is probable, the associated costs and possible return of goods can be estimated reliably,
there is no continuing management involvement with the goods, and the amount of revenue can be measured
reliably.
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is
recognised as a reduction of revenue as the sales are recognised.
The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.
For sales of goods, transfer usually occurs when the product is received at the customer’s warehouse; however,
for some international shipments, transfer occurs upon loading the goods onto the relevant carrier at the port.
Revenue from vessel chartering
Revenue from vessel chartering under an operating lease is recognised in profit or loss on a straight line basis
over the term of the lease.
Rental income receivable under operating lease
Rental income receivable under operating lease is recognised in profit or loss on a straight line basis over the
term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over
the term of the lease. Contingent rentals are recognised as income in the accounting period in which they
are earned.
(l)
Dividend income
Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is
established.
(m)
Lease payments
Payments made under operating leases are recognised in profit or loss on a straight line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the
term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance cost and the
reduction of the outstanding liability. The finance cost is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining
term of the lease when the lease adjustment is confirmed.
57
58
4
(n)
Finance income and costs
Finance income, which comprises interest income on loans, is recognised as it accrues in profit or loss, using
the effective interest method.
Finance costs, which comprise interest expense on borrowings, are recognised in profit or loss.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying
asset are recognised in profit or loss using the effective interest method.
(o)
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit
or loss except to the extent that it relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect
of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss; and
•
temporary differences related to investments in subsidiaries, associates and joint arrangements to the
extent that the Group is able to control the timing of the reversal of the temporary difference and it is
probable that they will not reverse in the foreseeable future; and
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain
tax provisions and whether additional taxes and interest may be due. The Group believes that its accruals
for tax liabilities are adequate for all open tax years based on its assessment of many factors including
interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and
may involve a series of judgments about future events. New information may become available that causes
the Group to change its judgment regarding the adequacy of existing tax liabilities. Such changes to tax
liabilities will impact tax expense in the period that such a determination is made.
4
(p) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weightedaverage number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS
is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted-average
number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential
ordinary shares, which comprise share options and share awards granted to employees.
(q)
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s
CEO (the chief operating decision maker) to make decisions about resources to be allocated to the segment
and to assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Group’s CEO include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets,
head office expenses, and tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant
and equipment, and intangible assets.
(r)
New standards and interpretations not adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2014 and have not been applied in preparing these financial statements.
Management has assessed that none of these new standards, amendments to standards and interpretations
are expected to have a significant effect on the financial statements of the Group and the Company. The
Group does not plan to early adopt these standards.
59
5
2,985
3,057
3,148
–
–
–
–
–
–
–
–
–
–
–
–
2,985
2
–
–
–
70
3,057
–
–
–
91
3,148
Freehold
land
$’000
3,725
5,740
5,567
470
101
–
–
(11)
560
129
–
–
–
(13)
676
4,195
–
–
–
2,013
92
6,300
–
–
–
(57)
6,243
Freehold
building
$’000
288
331
229
2,151
114
(6)
(18)
(33)
2,208
105
–
(17)
(90)
(2)
2,204
2,439
170
(7)
(20)
–
(43)
2,539
11
(17)
(93)
(7)
2,433
Furniture,
fittings
and office
equipment
$’000
5,974
6,080
5,644
2,948
924
(139)
–
111
3,844
1,072
–
(467)
(19)
178
4,608
8,922
1,004
(298)
–
–
296
9,924
1,003
(808)
(79)
212
10,252
Material
handling
equipment
$’000
334
243
116
815
140
(5)
(11)
(41)
898
150
–
(60)
–
(20)
968
1,149
51
(5)
(12)
–
(42)
1,141
36
(60)
(1)
(32)
1,144
Computers
$’000
596
443
471
1,419
180
(40)
–
(80)
1,479
199
–
(280)
–
10
1,408
2,015
43
(40)
–
–
(96)
1,922
253
(309)
–
13
1,879
Motor
vehicles
$’000
1,023
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,023
990
–
–
(2,013)
–
–
–
–
–
–
–
Assets under
construction
$’000
28,304
29,691
67,028
5,271
1,622
–
–
212
7,105
2,519
(985)
–
–
479
9,118
33,575
1,971
–
–
–
1,250
36,796
38,053
–
–
1,297
76,146
Barge and
vessels
$’000
43,229
45,585
82,303
13,074
3,081
(190)
(29)
158
16,094
4,174
(985)
(824)
(109)
632
18,982
56,303
4,231
(350)
(32)
–
1,527
61,679
39,356
(1,194)
(173)
1,517
101,185
Total
$’000
Included in additions of barge and vessels is an amount of S$28,263,000 (2013: nil) relating to two vessels acquired from previously held joint venture entities
pursuant to a deed of settlement entered between the Company, the joint venture entities and the joint venture partner. Details of this are set out in note 12.
Carrying amounts
At 1 January 2013
At 31 December 2013
At 31 December 2014
Accumulated depreciation and accumulated
impairment losses
At 1 January 2013
Depreciation charge for the year
Disposals
Written off
Translation differences on consolidation
At 31 December 2013
Impairment loss
Disposals
Written off
At 31 December 2014
Cost
At 1 January 2013
Additions
Disposals
Written off
Reclassification
At 31 December 2013
Additions
Disposals
Written off
At 31 December 2014
Group
60
5
Carrying amounts
At 1 January 2013
At 31 December 2013
At 31 December 2014
Accumulated depreciation
At 1 January 2013
Disposals
At 31 December 2013
Disposals
At 31 December 2014
Cost
At 1 January 2013
Additions
Disposals
Reclassification
At 31 December 2013
Additions
Disposals
At 31 December 2014
Company
1,136
1,136
1,136
–
–
–
–
–
–
–
1,136
–
–
–
1,136
–
–
1,136
Freehold
land
$’000
–
1,996
1,956
–
17
–
17
40
–
57
–
–
–
2,013
2,013
–
–
2,013
Freehold
building
$’000
132
92
57
1,441
52
–
1,493
37
–
1,530
1,573
12
–
–
1,585
2
–
1,587
21
196
180
814
32
–
846
53
(54)
845
835
207
–
–
1,042
37
(54)
1,025
296
197
89
242
115
(5)
352
117
–
469
538
16
(5)
–
549
9
–
558
Furniture,
fittings
Material
and office
handling
equipment equipment Computers
$’000
$’000
$’000
285
205
146
256
80
–
336
85
–
421
541
–
–
–
541
26
–
567
Motor
vehicles
$’000
1,023
–
–
–
–
–
–
–
–
–
1,023
990
–
(2,013)
–
–
–
–
Assets
under
construction
$’000
2,893
3,822
3,564
2,753
296
(5)
3,044
332
(54)
3,322
5,646
1,225
(5)
–
6,866
74
(54)
6,886
Total
$’000
61
62
5
The carrying amount of the property, plant and equipment of the Group and the Company includes amounts
totalling $273,000 (2013: $204,000) and $173,000 (2013: $204,000) respectively in respect of computers and
motor vehicles held under finance lease agreements.
The following property, plant and equipment are pledged as security to secure credit facilities:
Group
Carrying amount of:
- computers
- freehold land and building
- material handling equipment
- motor vehicles
- barge and vessel
2014
$’000
2013
$’000
51
4,695
3,636
222
29,380
37,984
107
4,741
2,206
199
20,904
28,157
Impairment loss in relation to barge and vessel
The recoverable amounts of the Group’s barge and vessels were estimated based on fair value less costs
of disposal, using external valuations performed by independent professional valuers, having appropriate
recognised professional qualifications and experience in the barge and vessels being valued. An impairment
loss of $985,000 (2013: nil) was recognised in the Group’s profit or loss.
6
Investments in subsidiaries
Company
Unquoted equity shares, at cost
Quasi-equity loans
Accumulated impairment losses
Carrying amount
2014
$’000
2013
$’000
18,093
16,645
34,738
(7,819)
26,919
18,093
24,150
42,243
(6,869)
35,374
Quasi-equity loans to subsidiaries are unsecured and non-interest bearing. Repayment of these loans is
neither planned nor likely to occur in the foreseeable future. As such, these loans are, in substance, part of
the Company’s net investments in subsidiaries, they are classified as non-current and stated at the cost less
accumulated impairment losses.
6
Investments in subsidiaries (cont’d)
The movements in accumulated impairment losses during the year were as follows:
Company
At 1 January
Impairment loss charged to profit or loss
At 31 December
2014
$’000
2013
$’000
6,869
950
7,819
5,469
1,400
6,869
The management of the Company has performed a review of the recoverable amounts of its investments in
its subsidiaries in accordance with the accounting policy stated in note 4(g). Certain subsidiaries are inactive
with no revenue generating activities. The recoverable amounts of investments in inactive subsidiaries were
determined based on the carrying amounts of their net assets, which comprise mainly monetary items. The
recoverable amounts of investments in active subsidiaries were determined based on the value in use of their
assets, which was determined by discounting future cash flows generated from continuing use. Cash flows
were projected over a period of 5 years at constant profit margins. A terminal value, which is the present value
of all future cash flows to perpetuity, assuming a constant growth rate is applied in the fifth year. The cash flow
projection is discounted at pre-tax rate of 2.96%.
Details of significant subsidiaries are as follows:
Name of subsidiaries
Country of incorporation
Arkstar Offshore Pte. Ltd. (1)
Arkstar Ship Management Pte. Ltd. (1)
Arkstar Voyager Pte. Ltd. (1)
Arkstar Energy Pte. Ltd. (1)
Arkstar Eagle 3 Pte. Ltd. (1)(6)
Arkstar Unicorn Pte. Ltd. (1)(6)
Ho Leong Tractors Sdn. Bhd. (2)
Trackspares (Aust) Pty. Ltd. (3)
Korea Crawler Track Ltd. (4)
Ebony Ritz Sdn. Bhd. (5)
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Malaysia
Australia
Korea
Malaysia
Effective
equity held
by the Group
2014
2013
%
%
100
100
100
100
100
100
100
100
100
80
100
100
100
100
–
–
100
100
100
80
In compliance with Rule 715(1) of the SGX-ST Listing Manual, all Singapore-incorporated subsidiaries are audited by
the Company’s auditors, KPMG LLP.
(1)
(2)
Audited by KPMG Malaysia.
(3)
Audited by Moore Stephens (Queensland) Audit Pty. Ltd.
(4)
Audited by Lian Accounting Corporation.
(5)
Audited by Moore Stephens Associates PLT.
(6)
Newly incorporated entities during 2014.
63
64
7
Investments in associates
Group
Unquoted equity shares, at cost
Share of post-acquisition results
Share of foreign currency translation
differences
Impairment losses
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
18,721
(16,811)
18,721
(4,429)
721
–
721
–
(1,910)
–
–
(1,743)
–
12,549
–
(721)
–
–
–
721
The Group’s share of losses in its associates for the year was $12,382,000 (2013: $10,726,000).
The Group’s share of post-acquisition results of its associates is based on their respective unaudited financial
statements, with such adjustments as considered appropriate for the Group’s equity accounting purposes.
Unless materially different, any changes to the share of results will be adjusted in future periods.
The management of the Company has performed a review of the recoverable amounts of its investments
in its associates in accordance with the accounting policy stated in note 4(g). Where impairment indicators
exist, the recoverable amount of the relevant investments in associates has been determined based on the
estimated fair value of the respective net assets at the reporting date (i.e. fair value less cost to sell). During
the year, an impairment loss of $721,000 (2013: Nil) had been recorded as the recoverable amounts were
determined to be lower than the Company’s carrying amounts of investment in the respective associates.
Details of significant associates are as follows:
Name of associates
Principal activities
Held by subsidiary, Ebony Ritz Sdn. Bhd.:
Semua International Sdn Bhd (1)
Investment holding
Semua Shipping Sdn Bhd (1) (2)
Owning and chartering of
vessels
Semado Maritime Sdn Bhd (1) (2)
vessels
(1) (2)
Semua Chemical Shipping Sdn Bhd
vessels
Mini Tanker Chartering Sdn Bhd (1) (2)
Owning and leasing
of an industrial building
Semua Ship Agency Pte. Ltd. (2)
Dormant
(1)
Audited by Moore Stephens Associates PLT.
(2)
Wholly-owned subsidiary of Semua International Sdn Bhd.
Country of
Effective equity
incorporation held by the Group
2014
2013
%
%
Malaysia
Malaysia
41.2
41.2
41.2
41.2
Malaysia
41.2
41.2
Malaysia
41.2
41.2
Malaysia
41.2
41.2
Singapore
41.2
41.2
7
Investments in associates (cont’d)
The following summarises the financial information of the Group’s material associate based on its consolidated
financial statements prepared in accordance with FRS.
Semua
International
Sdn. Bhd. and its
subsidiaries
$’000
2014
Revenue
Loss for the year
Total comprehensive income
Attributable to the Group
Attributable to the other investee’s shareholders
Non-current assets
Current assets
Current liabilities
Net assets
Group’s interest in net assets of investee
at beginning of the year
Group’s share of:
Loss for the year
Carrying amount of interest in investee
at end of the year
46,682
(29,957)
(6)
(29,963)
(12,345)
(17,618)
141,104
10,470
(48,689)
(99,750)
3,135
1,292
1,843
12,549
(12,382)
(167)
(12,549)
–
65
66
7
Investments in associates (cont’d)
Semua
International
Sdn. Bhd. and its
subsidiaries
$’000
2013
Revenue
Loss for the year
Non-current assets
Current assets
Current liabilities
Net assets
Group’s interest in net assets of investee
at beginning of the year
Group’s share of:
Loss for the year
Carrying amount of interest in investee
at end of the year
59,260
(22,132)
255
(21,877)
(9,013)
(12,864)
206,848
13,372
(86,473)
(99,887)
33,860
13,951
19,909
18,721
(4,429)
(1,743)
(6,172)
12,549
8
Deferred tax assets and liabilities
Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year
are as follows:
At 1
January
2013
$’000
Group
Deferred tax assets
Provisions
Others
Property, plant and
equipment
Recognised
Recognised
in profit
At 31
in profit
At 31
or loss
Exchange December or loss
Exchange December
(note 23) differences 2013
(note 23) differences 2014
$’000
$’000
$’000
$’000
$’000
$’000
428
186
614
77
(29)
48
(20)
(18)
(38)
485
139
624
(22)
(12)
(34)
8
(20)
(12)
471
107
578
(836)
112
(50)
(774)
92
(29)
(711)
Deferred tax assets and liabilities of the Company (prior to offsetting of balances) are attributable to the
following:
Company
Deferred tax assets
Provisions
2014
$’000
2013
$’000
19
18
Company
2014
$’000
2013
$’000
(38)
(38)
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred taxes relate to the same taxation authority. The following
amounts, determined after appropriate offsetting, are included in the statements of financial position as
follows:
Group
Deferred tax assets
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
578
(711)
624
(774)
–
(19)
–
(20)
Deferred tax assets have been recognised in respect of provisions to the extent that these balances will
reverse in the foreseeable future and to the extent that their realisation through future taxable profits is
probable.
67
68
9Inventories
Group
Raw materials
Work-in-progress
Finished goods
Goods-in-transit
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
3,094
5,962
22,176
881
32,113
1,775
5,058
24,612
781
32,226
–
–
13,441
–
13,411
–
–
16,845
245
17,090
In 2014, the amount of inventories recognised in cost of sales was $39,585,000 (2013: $38,109,000).
Work-in-progress consists primarily of raw material costs. Direct labour and overhead costs are insignificant.
The Group recognises allowance on obsolete inventories when inventory items are identified as obsolete.
Obsolescence is based on the physical and internal condition of inventory items and is established when
these inventory items are no longer marketable. Obsolete inventory items when identified are written off to
profit or loss. In addition to an allowance for specifically identified obsolete inventory, allowances are also
estimated based on the age of the inventory items. The Group believes such estimates represent a fair charge
of the level of inventory obsolescence in a given year. The Group reviews on a regular basis the condition of
its inventories.
Finished goods are stated after deducting an allowance for slow-moving inventories of $19,988,000 (2013:
$21,064,000) and $17,026,000 (2013: $17,830,000) for the Group and the Company, respectively.
Amounts of $50,000 (2013: nil) and $48,000 (2013: nil) were written off to the Group and the Company profit
or loss for the year respectively.
10
Group
Trade receivables due from:
- third parties
-subsidiaries
Less: allowance for impairment losses
Net trade receivables
Non-trade receivables due from:
-subsidiaries
- related parties
Loans to associates:
-interest-bearing
-interest-free
Less: allowance for impairment losses
Net loans to associates
Advances to suppliers
Deposits
Tax recoverable
Sundry receivables
Prepayments
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
21,377
–
21,377
(2,396)
18,981
20,055
–
20,055
(2,392)
17,663
12,059
23,558
35,617
(1,487)
34,130
13,236
16,997
30,233
(1,531)
28,702
–
2
–
36
52,598
–
20,653
–
27,168
1,090
28,258
–
28,258
80
152
176
209
47,858
344
48,202
28,901
977
29,878
–
29,878
114
227
131
2,034
50,083
461
50,544
23,352
1,090
24,442
(11,579)
12,863
–
70
26
27
99,714
87
99,801
25,049
977
26,026
–
26,026
–
67
26
1,909
77,383
138
77,521
Non-trade receivables due from subsidiaries and related parties are unsecured, interest-free and repayable
on demand.
The interest-bearing loans to associates are unsecured, bear interest at 8% (2013: 8%) per annum and are
repayable on demand.
The maximum exposure to credit risk for loans and receivables at the reporting date (by geographical
distribution) is given below:
Group
Singapore
Other ASEAN countries
Other Asian countries
Others
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
1,415
37,031
7,722
3,690
47,858
3,799
37,304
2,817
6,163
50,083
53,558
30,127
11,157
4,870
99,714
25,726
39,985
9,554
2,118
77,383
69
70
10
Trade and other receivables (cont’d)
Impairment losses
The ageing of loans and receivables at the reporting date is:
Group
Not past due
Past due 0 - 30 days
Past due more than 120 days
Company
Not past due
Past due more than 120 days
Gross
2014
$’000
Impairment
losses
2014
$’000
Gross
2013
$’000
Impairment
losses
2013
$’000
34,196
3,446
7,312
5,300
50,254
–
–
–
(2,396)
(2,396)
40,374
2,450
4,653
4,998
52,475
–
–
–
(2,392)
(2,392)
82,457
2,276
8,419
19,628
112,780
–
–
–
(13,066)
(13,066)
65,584
1,483
6,345
5,502
78,914
–
–
–
(1,531)
(1,531)
The movements in allowance for impairment losses in respect of loans and receivables during the year were
as follows:
Group
At 1 January
Impairment loss recognised/(reversed)
At 31 December
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2,392
13
(9)
2,396
2,753
(284)
(77)
2,392
1,531
11,535
–
13,066
1,767
(236)
–
1,531
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of
loans and receivables. The Group determines the estimates based on the aging of the loans and receivables,
credit-worthiness of customers or counter-parties, future collectability of loans and receivables and historical
write-off experience of loans and receivables. If the financial condition of the customers or counter-parties
were to deteriorate, actual write-offs could be higher than estimated. The main components of this allowance
are a specific loss component that relates to individually significant exposures.
The allowance account in respect to loans and receivables is used to record impairment losses unless the
Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is
considered irrecoverable and the amount charged to the allowance is written off against the carrying amount
of the impaired financial asset.
11
Group
Cash in hand and at banks
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
6,043
10,983
1,631
6,445
Cash at banks of approximately $3,626,000 (2013: $3,144,000) are held in countries with foreign exchange
controls.
The weighted average effective interest rates per annum for cash at banks at the reporting date for the Group
and the Company are 0.42% (2013: 0.40%) and 0.06% (2013: 0.05%), respectively. Interest rates for bank
deposits reprice at intervals of one, three or six months.
12
During the year, the Group acquired the two vessels amounting to S$28,263,000 previously held under its joint
venture entities, Aries Offshore Singapore Pte Ltd and its subsidiaries (“Aries Offshore”) pursuant to a deed
of settlement dated 12 February 2014 entered between the Company, Aries Offshore and the joint venture
partner for the termination of the joint venture, Aries Offshore. Under the deed of settlement, the Group
disposed its investment in, quasi-equity loans and advances to, Aries Offshore as part of the consideration
for the two vessels. The addition of the two vessels is included in the Group’s property, plant and equipment
under note 5. In addition, the Group recorded amounts of$1,985,000 (equivalent to US$1,500,000) and
$5,324,000 (equivalent to US$4,023,000) as payables (note 19) to the joint venture partner and Aries Offshore
respectively, as consideration for the acquisition of the two vessels and for the outstanding bank loan relating
to one of the vessels assumed by the Group under the terms of the deed of settlement.
13
Share capital
2014
No. of
shares
(’000)
Issued and fully paid ordinary shares, with
no par value
At 1 January
Issue of ordinary shares
At 31 December
289,384
216,407
505,791
Group and Company
2013
No. of
2014
shares
$’000
(’000)
2013
$’000
53,897
9,973
63,870
53,897
–
53,897
289,384
–
289,384
During the year, the Company issued 216,407,453 new ordinary shares of 4.6 cents per share by way of right
issue for cash to provide additional working capital.
The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at general meetings of the Company. All shares (excluding
treasury shares) rank equally with regard to the Company’s residual assets.
71
72
13
Share capital (cont’d)
Capital management
The Board’s policy is to maintain an adequate capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Board monitors the return on capital,
which the Group defines as profit for the year divided by total shareholders’ equity. The Board also monitors
the level of dividends to ordinary shareholders. The Group funds its operations and growth through a mix of
equity and debts. This includes the maintenance of adequate lines of credit and assessing the need to raise
additional equity, when required.
There were no changes in the Group’s approach to capital management during the year.
The Company and its subsidiaries are not subject to externally imposed capital requirements.
14
Currency translation reserve
The currency translation reserve of the Group comprises foreign currency differences arising from the
translation of the financial statements of foreign operations whose functional currency is in a foreign currency,
as well as from the translation of receivables denominated in foreign currencies, which form part of the
Company’s net investment in the foreign operations.
15
Share-based compensation reserve
This relates to the fair value of the share options and awards granted under the Company’s Share Option
Scheme 2009 (“ESOS 2009”) and Performance Share Plan 2009 (“PSP 2009”), which were approved and
adopted by its shareholders at an extraordinary general meeting held on 27 April 2009.
There were no options granted, exercised or cancelled during the financial year. Outstanding options at the
end of the financial year under the ESOS 2009, on the unissued ordinary shares of the Company, are as follows:
Date of grant
of options
Exercise
price
per share
$
13 April 2010
13 April 2010
27 April 2010
27 April 2010
5 May 2011
31 May 2012
0.42
0.34*
0.39
0.31*
0.23*
0.15*
Options outstanding at
1 January 2014 and 31
December 2014
150,000
250,000
350,000
130,000
50,000
231,000
1,161,000
Number of option
holders at
31 December
2014
Exercise period
3
4
4
2
1
5
5 May 2013 to 4 May 2021
31 May 2014 to 30 May 2022
*These options were granted to the employees of the Group at a 20% discount to the average closing market price of
the Company’s shares for the last five trading days immediately preceding the date of grant.
15
Share-based compensation reserve (cont’d)
Details of the share awards granted, vested or cancelled during the financial year under the PSP 2009 are as
follows:
Date of grant of
share awards
Share awards
outstanding at
1 January 2014
Share awards
cancelled/lapsed
Share awards
outstanding at
31 December 2014
632,200
90,000
722,200
(316,100)
(316,100)
316,100
90,000
406,100
6 May 2011
31 May 2012
Terms and conditions of the ESOS 2009 and PSP 2009
The terms and conditions relating to the grants under the ESOS 2009 are given below:
Grant date /
Personnel entitled
Exercise No of options
price
2014
2013
$
(’000) (’000)
Vesting conditions
Contractual
life of options
Options granted to nonexecutive directors on
13 April 2010
0.42
150
150
50% of the options will vest after one
5 years from
year from the grant date and the
the grant date
remaining 50% of the options will vest
after two years from the grant date.
Options granted to
employees on
13 April 2010
0.34
250
250
50% of the options will vest after two
10 years from
years from the grant date and the
the grant date
after three years from the grant date.
Options granted to
executive directors on
27 April 2010
0.39
300
300
10 years from
the grant date
Options granted to
employees who are
associates of the
controlling shareholders
of the Company on
27 April 2010
0.39
50
50
10 years from
the grant date
Options granted to
employees who are
associates of the
of the Company on:
- 27 April 2010
- 5 May 2011
- 31 May 2012
Total number of options
50% of the options will vest after two
10 years from
years from the grant date and the
the grant date
after three years from the grant date.
0.31
0.23
0.15
130
50
231
130
50
231
1,161
1,161
73
74
15
The terms and conditions relating to the grants under the PSP 2009 are given below:
Grant date /
Personnel entitled
Share awards granted to
executive directors on 6 May
2011
Share awards granted to
employees who are associates of
the controlling shareholders of
the Company:
- 6 May 2011
- 31 May 2012
Total number of share awards
No of
share awards
2014
2013
(’000) (’000)
257
515
Vesting conditions
50% of the share awards will vest after two years from
the grant date and the remaining 50% of the share
awards will vest after three years from the grant date.
50% of the share awards will vest after two years from
the grant date and the remaining 50% of the share
awards will vest after three years from the grant date.
59
90
117
90
406
722
Disclosures of the ESOS 2009
The number and weighted average exercise prices of share options are as follows:
Weighted
Weighted
average exercise Number of average exercise Number of
price
options
price
options
2014
2014
2013
2013
$
(’000)
$
(’000)
Outstanding at 1 January and
31 December
0.32
1,161
0.32
1,161
The options outstanding at 31 December 2014 have an exercise price in the range of $0.15 to $0.42 (2013:
$0.15 to $0.42) and a weighted average contractual life of 7.4 years (2013: 8.4 years).
15
Inputs for measurement for fair values at grant date
The fair value at grant date of the share options and awards granted was measured based on the BlackScholes formula. The expected volatility is estimated by considering historic average share price volatility.
The inputs used in the measurement of the fair value at grant date of the share options and awards are as
follows:
Fair value of share
options/awards and
assumptions
< ------------------------------------ESOS 2009------------------------------------- > <---- PSP 2009---->
Executive
directors
who are
Employees who
Employees who are
controlling
are controlling
associates of the
shareholders
Nonshare holders of
of the
executive
the Company and
of the Company
Company directors Employees their associates
2012
2011
2010
2010
2010
2010
2012
2011
Number of share
options/awards
granted
231,000 50,000 180,000
Fair value at grant date
$0.11
$0.20
$0.19
Share price at grant date
$0.18
$0.28
$0.39
Exercise price
$0.15
$0.23
$0.31
Expected volatility
(weighted average)
87.35% 101.1% 42.07%
Option life (expected
weighted average)
10 years 10 years 10 years
Expected dividends
2.86% 1.89% 1.34%
Risk-free interest rate
0.23% 0.47% 1.19%
300,000
$0.17
$0.39
$0.39
150,000
$0.14
$0.42
$0.42
250,000
$0.19
$0.42
$0.34
90,000 316,100
$0.16 $0.252
$0.18 $0.252
–
–
42.07%
42.07%
42.07%
87.35% 101.1%
10 years
1.34%
1.19%
5 years
1.34%
1.19%
10 years
1.34%
1.19%
–
2.86%
0.23%
–
1.89%
0.47%
Employee expenses
The expense recognised as employee costs for the share options and awards granted in 2014 was $20,000
(2013: $63,000).
75
76
16
Group
Secured bank loan C
Unsecured bank loans
Finance lease liabilities
Current liabilities
Secured bank loan B
Secured bank loan C
Unsecured bank loans
Unsecured trust receipts
Financial derivatives
Total financial liabilities
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2,147
7,297
235
9,679
2,741
18,246
200
21,187
–
–
100
100
–
18,246
200
18,446
9,263
2,413
46,697
12,019
128
308
70,828
80,507
1,915
3,027
30,046
12,971
100
77
48,136
69,323
–
–
46,697
12,019
100
308
59,124
59,224
–
–
30,046
12,971
100
77
43,194
61,640
(i)The secured bank loan B is granted to a subsidiary and is secured by a first legal mortgage over the
vessel of the subsidiary and corporate guarantees provided by the Company.
(ii)The secured bank loan C is granted to a subsidiary and is secured by a first legal mortgage over the
freehold land and building, and certain plant and equipment of the subsidiary.
At 31 December 2014, the Group and the Company had obligations under finance leases that are repayable
as follows:
< -------------------- 2014 -------------------- > < -------------------- 2013 -------------------- >
Payments
Interest
Principal
Payments
Interest
Principal
$’000
$’000
$’000
$’000
$’000
$’000
Group
Payable:
Within 1 year
After 1 year but within 5 years
152
277
429
24
42
66
128
235
363
113
232
345
13
32
45
100
200
300
< -------------------- 2014 -------------------- > < -------------------- 2013 -------------------- >
Payments
Interest
Principal
Payments
Interest
Principal
$’000
$’000
$’000
$’000
$’000
$’000
Company
Payable:
Within 1 year
113
113
226
13
13
26
100
100
200
113
232
345
13
32
45
100
200
300
16
Financial liabilities (cont’d)
Terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
Year
of maturity
Group
S$ floating rate loans:
- unsecured loans
US$ floating rate loans:
- secured loan B
- unsecured loan
KRW floating rate loan:
- secured loan C
Company
S$ floating rate loans:
- unsecured loans
US$ floating rate loans:
- unsecured loans
< -------------- 2014 -------------- > < -------------- 2013 -------------- >
Face
Carrying
Face
Carrying
value
amount
value
amount
$’000
$’000
$’000
$’000
2014 – 2015
26,650
26,650
26,601
26,601
2014 – 2015
2014 – 2017
9,263
27,344
9,263
27,344
1,915
21,691
1,915
21,691
2014 – 2019
2014 – 2018
2014 – 2015
2014 – 2015
4,560
363
12,019
308
80,507
4,560
363
12,019
308
80,507
5,768
300
12,971
77
69,323
5,768
300
12,971
77
69,323
2014 – 2015
26,650
26,650
26,601
26,601
2014 – 2017
2014 – 2018
2014 – 2015
2014 - 2015
20,047
200
12,019
308
59,224
20,047
200
12,019
308
59,224
21,691
300
12,971
77
61,640
21,691
300
12,971
77
61,640
The S$ floating rate loans bear interest ranging from 1.6% to 2.7% (2013: 1.6% to 2.4%) per annum and are
repriced on a monthly basis.
The US$ floating rate loans bear interest ranging from 1.5% to 2.3% (2013: 0.8% to 2.3%) per annum and are
repriced on a monthly basis.
The KRW floating rate loan bears interest ranging from 3.02% to 5.09% (2013: 2.3% to 4.5%) per annum and is
repriced on a quarterly basis.
The weighted average effective interest rate of unsecured loans and trust receipts at the end of financial year
is 1.0% (2013: 1.0%) and 2.0% (2013: 2.0%) per annum respectively.
Certain of the Group’s banking facilities are subject to the fulfilment of covenants relating to certain balance
sheet ratios, and minimum level of net worth by the Group and its subsidiaries, as are commonly found
in lending arrangements with financial institutions. If the Group and its subsidiaries were to breach the
covenants, the drawn down facilities would become repayable on demand. The Group regularly monitors
its compliance with these covenants. Further details of the Group’s management of liquidity risk are set out
below. As at the reporting date, certain of the covenants relating to drawn down facilities had been breached.
77
78
16
Breach of loan covenants
The Company has bank loans with total carrying amount of $59,224,000 at 31 December 2014. These bank
loans prescribed loan covenants, which included the following:
•
The Group’s consolidated tangible net worth (as defined by the banks in the loan agreements) must
exceed $60,000,000; and
•
The Group’s gearing ratio (as defined by the banks in the loan agreements) has to meet the stipulated
ratio of 2.0.
As at 31 December 2014, the Company was in breach of the above loan covenants.
As these breaches of loan covenants were not rectified before year end, bank loans amounting to approximately
$13,600,000 have been presented as current liabilities as at 31 December 2014. The Company obtained
waivers from the bankers on the above loan covenants subsequent to the financial year end.
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements:
Carrying amount
$’000
Group
2014
Variable interest rate loans
Trust receipts
Derivative financial liabilities
Forward exchange contracts
2013
Trust receipts
Contractual cash
flows
$’000
Cash flows
Within
1 year
$’000
Within
1 to 5 years
$’000
67,817
363
12,019
22,941
103,140
(68,875)
(429)
(12,019)
(22,941)
(104,264)
(59,998)
(152)
(12,019)
(22,941)
(95,110)
(8,877)
(277)
–
–
(9,154)
308
(308)
(308)
–
55,975
300
12,971
20,749
89,995
(58,022)
(345)
(12,971)
(20,749)
(92,087)
(36,617)
(115)
(70,452)
(21,405)
(230)
–
–
(21,635)
77
(77)
(77)
–
(12,971)
(20,749)
16
Carrying amount
$’000
Company
2014
Trust receipts
2013
Trust receipts
Cash flows
Contractual
cash flows
$’000
46,697
200
12,019
12,160
71,076
(46,743)
(226)
(12,019)
(12,160)
(71,148)
308
Within
1 year
$’000
(46,743)
(113)
Within
1 to 5 years
$’000
(71,035)
–
(113)
–
–
(113)
(308)
(308)
–
48,292
300
12,971
16,063
77,626
(50,045)
(345)
(12,971)
(16,063)
(79,424)
(31,531)
(115)
(60,680)
–
–
–
–
–
77
(77)
(77)
–
(12,019)
(12,160)
(12,971)
(16,063)
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
17
Loan from non-controlling shareholder of a subsidiary
Loan from non-controlling shareholder of a subsidiary is unsecured and interest-free. Repayment of this loan
is neither planned nor likely to occur in the foreseeable future. As the amount, in substance, represent as a
part of the non-controlling shareholder’s interest in the net investment in subsidiary, it is stated at cost.
79
80
18
Deferred income
Group and Company
2014
2013
$’000
$’000
Non-current
Current
2,340
5,196
7,536
7,537
5,196
12,733
Deferred income resulted from the sale and leaseback of the Company’s leasehold property and the Building
Extension, which were completed in 13 June 2011 and January 2013 respectively.
The excess of sales consideration of leasehold property and Building Extension over its fair value were
deferred and amortised on a straight-line basis over the remaining non-cancellable lease term commencing
from the completion date.
In 2014, deferred income of $5,197,000 (2013: $5,139,000) (note 22) has been amortised and recognised as
other expenses in the statement of profit or loss.
19
Group
Trade payables due to:
- third parties
-subsidiaries
Bills payable (unsecured)
Non-trade payables due to:
- immediate holding company
-subsidiaries
- non-controlling shareholders
of subsidiaries
- previously held joint venture entity
and its joint venture partner (note 12)
Accrued expenses
Deposits received
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
6,588
–
40
5,247
–
295
455
2,213
40
537
1,977
295
4,511
–
9,447
–
4,511
3,599
9,447
1,446
763
777
–
–
7,309
3,384
346
22,941
–
4,526
457
20,749
–
996
346
12,160
–
1,904
457
16,063
Outstanding balances with related parties are unsecured, interest-free and repayable on demand.
20Revenue
Revenue represents sales of goods less discounts and returns, and income from chartering of vessels.
Group
Sales of goods
Vessels chartering
21
2014
$’000
2013
$’000
58,203
8,223
66,426
65,283
5,679
70,962
Finance income and costs
Group
Finance income:
- bank deposits
Finance costs:
- interest-bearing borrowings
- finance lease liabilities
-others
Net finance costs recognised in profit or loss
2014
$’000
2013
$’000
26
26
45
45
(1,296)
(16)
(285)
(1,597)
(1,571)
(1,483)
(13)
(89)
(1,585)
(1,540)
81
82
22
The following items have been included in arriving at loss before income tax:
Group
Note
Audit fees paid and payable to:
- auditors of the Company
- other auditors
(Write-back)/allowance made for slow-moving inventories
Inventories written off/(written-back)
Allowance made/(written-back) for doubtful receivables
Equity-settled share-based compensation
Gain on disposal of property, plant and equipment
Foreign exchange (gain)/loss
Loss arising on derivative financial instruments
Property, plant and equipment written off
Impairment loss on property, plant and equipment
Impairment loss on investment in joint ventures
Operating lease expenses
Staff costs
Contributions to defined contribution plans,
included in staff costs
Amortisation of deferred income
Rental income
23
5
5
19
2014
$’000
2013
$’000
228
113
(1,076)
50
13
20
(41)
(716)
289
64
985
–
5,718
8,086
222
112
927
(82)
(284)
62
(131)
2,437
103
3
–
500
5,805
7,811
660
(5,197)
(2,547)
580
(5,139)
(2,200)
Income tax expense/(credit)
Group
2014
$’000
2013
$’000
Current tax expense
Current year
333
96
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense/(credit)
(58)
275
(160)
(64)
23
Income tax expense/(credit) (cont’d)
Group
2014
$’000
2013
$’000
(23,059)
(15,852)
(3,920)
(16)
2,502
955
(677)
(2)
1,532
–
(99)
275
(2,695)
(916)
2,579
626
(737)
(23)
849
165
88
(64)
Reconciliation of effective tax rate
Tax using the Singapore tax rate of 17% (2013: 17%)
Effect of tax rates in foreign jurisdictions
Effect of results of associates, net of tax
Non-deductible expenses
Tax exempt income
Tax incentives
Benefits of deferred tax assets not recognised
Change in unrecognised temporary differences
Others
Deferred tax assets have not been recognised in respect of the following items:
Group
Deductible temporary differences
Capital allowances
Tax losses
2014
$’000
2013
$’000
2,475
63
19,573
22,111
2,616
1,962
8,522
13,100
The tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the
respective countries in which certain subsidiaries operate. The tax losses, capital allowances and deductible
temporary differences do not expire under current tax legislation. Deferred tax assets have not been
recognised in respect of these items because it is not probable that future taxable profit will be available
against which the Group can utilise the benefits.
83
84
24
Earnings per share
Group
2014
2013
Basic earnings per share (cents)
(7.47)
(4.65)
Diluted earnings per share (cents)
(7.47)
(4.65)
The basic earnings per share is calculated based on:
Group
Loss attributable to owners of the Company
Issued ordinary shares at 1 January
Ordinary shares issued during the year
Effect of own shares held
Weighted average number of ordinary shares used in the calculation of
basic earnings per share for the financial year
2014
$’000
2013
$’000
(22,807)
(13,441)
No. of
Shares
(’000)
No. of
shares
(’000)
289,384
16,421
(360)
289,384
–
(278)
305,445
289,106
The diluted earnings per share is calculated based on:
Group
Loss attributable to owners of the Company
basic earnings per share for the financial year
Effect of share awards granted
diluted earnings per share for the financial year
2014
$’000
2013
$’000
(22,807)
(13,441)
No. of
Shares
(’000)
No. of
shares
(’000)
305,445
722
289,106
722
306,167
289,828
The share options outstanding as at 31 December 2014 and 2013 were excluded from the diluted weighted
average number of ordinary shares calculation as their effect would have been anti-dilutive. As the potential
shares are anti-dilutive, i.e. decreasing the loss per share, the diluted loss per share for the financial year
ended 31 December 2014 was computed on the same basis as basic loss per share.
The average market value of the Company’s shares for the purposes of calculating the dilutive effect of share
options is based on the quoted market prices for the period during which the options were outstanding.
25
Operating segments
The Group has three operating and reportable segments, as described below, which are the Group’s strategic
business units. The strategic business units offer different products and services, and are managed separately
because they require different marketing strategies. For each of the strategic business units, the Group’s
CEO reviews internal management reports at least on a quarterly basis. The following summary describes the
operations in each of the Group’s reportable segments:
Design and manufacture
Design, manufacture and sale of equipment parts for both heavy equipment and industrial machinery under
in-house brand names, “KBJ”, “OEM”, “ROSSI” and “TMI”.
Trading and distribution
Trading and distribution of an extensive range of equipment parts for both heavy equipment and industrial
machinery sourced from third parties.
Vessel chartering
Chartering of vessels to oil and gas industry.
Information regarding the results of each reportable segment is included below. Performance is measured
based on segment profit before income tax, as included in the internal management reports that are reviewed
by the Group’s CEO.
85
25
37,768
12,611
Reportable segment assets
Unallocated assets
Total assets
Reportable segment liabilities
Unallocated liabilities
- interest-bearing borrowings
-others
Total liabilities
18,893
41,867
(1,170)
–
4,238
19,742
(429)
–
10,302
18,530
(1,063)
–
48,035
77,478
(9,770)
–
–
–
(12,382)
39,641
69,032
(1,998)
(721)
–
–
(10,726)
68,836
20,140
17,990
106,966
32,433
17,656
114,973
129,429
44,363
173,792
(4,231)
(721)
(845)
285
(10,726)
152
2,182
(2,711)
(15,852)
(15,475)
45
(1,585)
(3,081)
70,962
2013
$’000
64,884
134,988
34,195
169,183
(11,093)
–
(894)
–
(439)
143
–
(20,646)
26
(1,597)
(4,174)
66,426
Capital expenditure:
Purchase of property, plant and equipment
Acquisition of interests in associates and joint ventures
312
–
–
(11,996)
839
(122)
(1,625)
5,679
954
13
(12,382)
(406)
142
–
(19,296)
–
(155)
(2,529)
8,223
Total
642
13
–
(981)
(272)
(456)
(294)
24,310
2014
$’000
Other material non-cash items:
Inventories obsolescence
Bad and doubtful debts
Share of results of associates and joint ventures
(1,556)
14
(415)
(375)
19,903
Vessel chartering
2014
2013
$’000
$’000
–
2,725
(5,138)
(23,059)
(2,498)
(522)
(1,007)
(1,162)
40,973
Trading and
distribution
2014
2013
$’000
$’000
Unallocated income
Unallocated expenses
206
12
(1,027)
(1,270)
Finance income
Finance costs
Depreciation
Reportable segment profit before income tax
38,300
Design and
manufacture
2014
2013
$’000
$’000
External revenue
Information about reportable segments
Business segments
Operating segments (cont’d)
86
25
Operating segments (cont’d)
Geographical segments
The design and manufacture, trading and distribution, and vessel chartering segments are presented below in
four principal regions, namely, Singapore, other ASEAN countries, other Asian countries (excluding Singapore
and other ASEAN countries) and other regions of the world.
In presenting information on the basis of geographical segments, segment revenue is based on the
geographical location of customers. Segment assets are based on the geographical location of the assets.
Revenue
Singapore
Other ASEAN countries
Other Asian countries
Others
26
2014
$’000
2013
$’000
1,408
24,167
13,861
26,990
66,426
2,345
32,283
8,793
27,541
70,962
Non-current
assets (excluding deferred tax
assets)
2014
2013
$’000
$’000
69,749
876
9,694
1,984
82,303
3,047
42,888
10,059
2,140
58,134
Financial risk management
General
The Group has a system of controls in place to create an acceptable balance between the potential loss
from risks occurring and the cost of managing the risks. The management continually monitors the Group’s
risk management process to ensure that an appropriate balance between risk and control is achieved. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the
Group’s activities.
The Audit Committee oversees how management monitors compliance with the Group’s risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the
risks faced by the Group. The Audit Committee is assisted in its oversight role by an outsourced Internal
Audit function. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
The financial risk management is described below:
87
88
26
Financial risk management (cont’d)
Credit risk
The Group has a credit policy in place which establishes credit limits for customers and monitors their balances
on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain
amount. The credit limit of each customer is established after taking into account the financial position of,
and past experience with, the customer.
The Group establishes an allowance for impairment losses that represents its estimate of incurred losses
in respect of trade and other receivables. The allowance account in respect of trade receivables is used to
record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At
that point, the financial asset is considered irrecoverable and the amount charged to the allowance account
is written off against the carrying amount of the impaired financial asset.
Cash are placed with banks and financial institutions which are regulated.
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate
by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising
the return.
Interest rate risk
The Group’s exposure to risk of change in cash flows due to changes in interest rates relates primarily to
the Group’s variable-rate borrowings with financial institutions. Short-term receivables and payables are not
exposed to interest rate risk.
Exposure to interest rate risk
At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was as
follows:
Group
Variable rate instruments
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
68,125
56,052
47,005
48,369
26
Interest rate risk (cont’d)
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points (bp) in interest rates at the reporting date would have increased/(decreased)
profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same basis for 2013.
Profit or loss
100 bp
100 bp
increase
decrease
$’000
$’000
Group
31 December 2014
(681)
681
31 December 2013
(560)
560
Company
31 December 2014
(470)
471
31 December 2013
(483)
483
Foreign currency risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in
currencies other than the respective functional currencies of Group entities. The currencies giving rise to this
risk are primarily Euro and US dollar.
In respect of monetary assets and liabilities held in currencies other than Singapore dollar, the Group ensures
that the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates,
where necessary, to address short-term imbalances. The Group uses forward exchange contracts to hedge
its foreign currency risk. At 31 December 2014, the Group has outstanding forward exchange contracts with
notional amounts of MYR32,118,000 (2013: US$2,000,000 and MYR44,294,000).
89
90
26
Foreign currency risk (cont’d)
The Group’s and Company’s exposures to foreign currency risk are as follows:
31 December 2014
Euro
US dollar
$’000
$’000
Group
Assets held for sale
Net statement of financial position
exposure
Net exposure
–
31
–
(50)
(214)
12,189
1,751
–
(9,984)
(42,123)
–
81
–
(45)
(53)
9,698
5,419
21,291
(2,023)
(32,957)
(233)
–
(233)
(38,167)
–
(38,167)
(17)
–
(17)
1,428
(2,520)
(1,092)
31 December 2014
Euro
US dollar
$’000
$’000
Company
Quasi-equity loans to subsidiaries
Assets held for sale
Net statement of financial position
exposure
Net exposure
31 December 2013
Euro
US dollar
$’000
$’000
31 December 2013
Euro
Euro
$’000
$’000
–
–
31
–
(50)
(214)
3,308
6,578
715
–
(246)
(26,859)
–
–
81
–
–
(53)
10,561
4,659
4,928
20,088
(670)
(31,042)
(233)
–
(233)
(16,504)
–
(16,504)
(28)
–
(28)
8,524
(2,520)
6,004
26
Foreign currency risk (cont’d)
Sensitivity analysis
A 10% strengthening of the Singapore dollar against the following currencies at the reporting date would
have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that
all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis
for 2013, as indicated below:
Group
Profit or loss
Equity
$’000
$’000
Company
Profit or loss
Equity
$’000
$’000
31 December 2014
Euro
US dollar
23
3,817
–
–
23
1,650
–
–
31 December 2013
Euro
US dollar
2
109
–
–
3
(600)
–
–
A 10% weakening of the Singapore dollar against the above currencies would have an equal but opposite
effect on equity and profit or loss by the amounts shown above, on the basis that all other variables, in
particular interest rates, remain constant.
Estimation of fair values
The following summarises the significant methods and assumptions used in estimating the fair values of
financial instruments of the Group and the Company.
Derivatives
The fair values of forward exchange contracts are based on counterparty quotes.
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance
leases, the market rate of interest is determined by reference to similar lease agreements.
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade
and other receivables, cash and cash equivalents and trade and other payables) are assumed to approximate
their fair values because of the short period to maturity.
91
92
26
Fair value hierarchy
The table below analyses fair value measurements for assets and liabilities, by the levels in the fair value
hierarchy based on the inputs to valuation techniques. The different levels are defined as follows:
•
Level 1 fair value measurements are those instruments valued based on quoted prices (unadjusted) in
active markets for identical assets or liabilities.
•
Level 2 fair value measurements are those instruments valued using inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
•
Level 3 fair value measurements are those instruments valued using valuation techniques that include
inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Group and Company
2014
Financial instrument which is not
carried at fair value but for which
fair value is disclosed:
–
(308)
–
(308)
–
(77)
–
(77)
2013
Financial instrument which is not
carried at fair value but for which
fair value is disclosed:
26
Accounting classifications and fair values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of
financial position, are as follows:
Other
Other
financial
financial
liabilities
liabilities
outside
Loans and within scope scope of FRS
Note receivables
of FRS 39
39
$’000
$’000
$’000
Group
31 December 2014
Cash and cash equivalents 11
Trade and other receivables 10
16
19
31 December 2013
Total
carrying
amount
$’000
Fair
value
$’000
6,043
47,858
53,901
–
–
–
–
–
–
6,043
47,858
53,901
6,043
47,858
53,901
–
–
–
80,144
22,941
103,085
363
–
363
80,507
22,941
103,448
80,507
22,941
103,448
10,983
50,083
61,066
–
–
–
–
–
–
10,983
50,083
61,066
10,983
50,083
61,066
16
19
–
–
–
69,023
20,749
89,772
300
–
300
69,323
20,749
90,072
69,323
20,749
90,072
Company
31 December 2014
11
10
1,631
99,714
101,345
–
–
–
–
–
–
1,631
99,714
101,345
1,631
99,714
101,345
16
19
–
–
–
59,024
12,160
71,184
200
–
200
59,224
12,160
71,384
59,224
12,160
71,384
93
94
26
Accounting classifications and fair values (cont’d)
Other
Other
financial
financial
liabilities
liabilities
outside
Loans and within scope scope of FRS
Note receivables
of FRS 39
39
$’000
$’000
$’000
Company
31 December 2013
16
19
Total
carrying
amount
$’000
Fair
value
$’000
6,445
77,383
83,828
–
–
–
–
–
–
6,445
77,383
83,828
6,445
77,383
83,828
–
–
–
61,340
16,063
77,403
300
–
300
61,640
16,063
77,703
61,640
16,063
77,703
27Commitments
(a)
Operating lease commitments
The Group and the Company lease land, office, warehouse and factory facilities under operating
leases. The leases typically run for an initial period of one to five years (2013: one to five years), with
an option to renew after that date. Lease payments are usually increased annually to reflect market
rentals. None of the leases includes contingent rentals.
At 31 December 2014, the Group and the Company had commitments for future minimum lease
payments under non-cancellable operating leases as follows:
Group
Payable:
Within 1 year
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
6,233
2,815
9,048
6,255
8,854
15,109
6,121
2,814
8,935
5,988
8,803
14,791
27
Commitments (cont’d)
(b)
Operating lease receivable
The Company sublets part of its leased building, and two subsidiaries charter out their respective
barge and vessel. The leases typically run for an initial period of two to three years, with an option to
renew after that date.
At 31 December 2014, the Group and the Company had non-cancellable operating lease receivable as
follows:
Group
Receivable:
Within 1 year
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
15,733
26,475
42,208
9,362
16,895
26,257
1,827
1,816
3,643
2,231
2,455
4,686
28Contingencies
Intra-group financial guarantees
Intra-group financial guarantees comprise guarantees granted by the Company to banks in respect of bank
facilities amounting to $17,202,000 (2013: $1,915,000) granted to certain subsidiaries. The bank facilities will
be fully repaid in 2014, and are secured by mortgages over the vessels of these subsidiaries. The fair value
of the guarantees is insignificant and the financial positions of the subsidiaries are sound. At the reporting
date, the Company does not consider it probable that a claim will be made against the Company under these
guarantees.
Financial support
The Company has given formal undertakings, which are unsecured, to provide financial support to its
subsidiaries. As at 31 December 2014, the current liabilities exceed its current assets and deficits in
shareholders’ funds of these subsidiaries amounted to approximately $14,920,000 and $5,780,000 (2013:
$18,272,000 and $8,602,000) respectively.
29
Related party transactions
For the purpose of these financial statements, parties are considered to be related to the Group if the Group
has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the Group and the party are subject to common
control or common significant influence. Related parties may be individuals or other entities. An affiliated
corporation refers to a corporation other than a subsidiary or an associate, which is directly or indirectly under
common management control or significant influence of certain shareholders of the Company.
95
96
29
Related party transactions (cont’d)
Other related party transactions
Other than those disclosed elsewhere in the financial statements, transactions with related parties are as
follows:
Group
Affiliated corporations
Interest expenses
Security expenses
Rental and miscellaneous expenses
Rental income
2014
$’000
2013
$’000
183
18
261
74
85
14
259
76
Key management personnel compensation
Key management personnel of the Group are persons having the authority and responsibility for planning,
directing and controlling the activities of Group entities. The directors, department heads and the chief
executive officer are considered as key management personnel of the Group.
Group
Key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits (including CPF)
30
2014
$’000
2013
$’000
1,849
80
1,929
2,484
83
2,567
Subsequent events
On 27 January 2015, the Company signed a binding heads of agreement (“HOA”) with Reachmont Logistics
Sdn Bhd (“RLSB”) and Asia Bioenergy Technologies Berhad (“ABT”) for the disposal of the Company’s
investment in Semua International Sdn Bhd and its subsidiaries (collectively “SISB”) and its entire loan
receivables owing from SISB.
Under the HOA, the Company shall sell its investment in and receivables from SISB amounting to a total of
S$26.7 million for an indicative total consideration of Malaysia Ringgit (MYR) 64 million (approximately S$24.8
million), which consists of (i) cash consideration of MYR10 million (approximately S$3.9 million) (ii) ordinary
shares in ABT of MYR34 million (approximately S$13.2 million) and (iii) Convertible Preference Shares issued
by ABT amounting to MYR20 million (approximately S7.7 million).
The completion is subject to precedent conditions under the HOA which included the approval by the
shareholders of the Company, ABT and Ebony.
Shareholding Statistics
As at 18 March 2015
Class of shares
Voting rights
No. of issued and paid-up shares
(excluding treasury shares)
No. of treasury shares held
:
:
:
Ordinary shares fully paid
One vote per share
505,790,724
:
360,000
DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGS AS AT 18 MARCH 2015
SIZE OF SHAREHOLDINGS
NO. OF
SHAREHOLDERS
%
NO. OF SHARES
%
101
112
353
978
25
6.44
7.14
22.50
62.33
1.59
1,016
76,271
2,475,355
83,093,346
420,504,736
0.00
0.01
0.49
16.42
83.08
1,569
100.00
506,150,724
100.00
NUMBER OF
SHARES HELD
%
323,749,267
15,506,617
15,314,117
15,314,117
7,400,592
5,570,000
5,020,428
4,922,492
3,616,388
2,280,000
2,082,500
1,948,500
1,895,000
1,610,000
1,600,000
1,561,311
1,559,250
1,479,650
1,415,007
1,256,000
415,101,236
63.96
3.06
3.03
3.03
1.46
1.10
0.99
0.97
0.71
0.45
0.41
0.38
0.37
0.32
0.32
0.31
0.31
0.29
0.28
0.25
82.00
1 - 99
100 - 1000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 AND ABOVE
TOTAL
TWENTY LARGEST SHAREHOLDERS AS AT 18 MARCH 2015
NO. SHAREHOLDER’S NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HOE LEONG CO. (PTE) LTD
KUAH GEOK LIN
KUAH GEOK KHIM
QUAH YOKE HWEE
KUAH GEOK KHIM
UOB KAY HIAN PTE LTD
CIMB SECURITIES (SINGAPORE) PTE LTD
MAYBANK NOMINEES (SECURITIES) PTE LTD
OCBC SECURITIES PRIVATE LTD
NUN KWONG HOLDINGS PTE LTD
KUAH YEOK BIN
MAYBANK KIM ENG SECURITIES PTE LTD
CHEW CHENG
TAN GUEE PANG
ONG MUN WAH
PHILLIP SECURITIES PTE LTD
LIEW HIEN CHONG
SENG SONG WEN
UNITED OVERSEAS BANK NOMINEES PTE LTD
KUAH GEOK WAH
TOTAL
97
98
Shareholding Statistics
As at 18 March 2015
REGISTER OF SUBSTANTIAL SHAREHOLDERS AS AT 18 MARCH 2015
Hoe Leong Co. (Pte.) Ltd.
Kuah Geok Lin
Kuah Geok Khim
Quah Yoke Hwee
Mdm Kuah Geok Khim
Direct Interest
No. of Shares
%
Deemed Interest
No. of Shares
%
323,749,267
15,506,617
15,314,117
15,314,117
7,400,592
63.96
3.07
3.03
3.03
1.46
–
323,749,267
323,749,267
323,749,267
323,749,267
–
64.01
64.01
64.01
64.01
Note:
*Messrs Kuah Geok Lin, Kuah Geok Khim, Quah Yoke Hwee and Mdm Kuah Geok Khim are deemed to be interested in the
shares of the Company held by Hoe Leong Co. (Pte.) Ltd. by virtue of Section 7(4) of the Companies Act.
PERCENTAGE OF SHAREHOLDING IN THE HANDS OF THE PUBLIC
As at 18 March 2015, 24.71% of the issued share capital of the Company was held in the hands of the public (based
on the information available to the Company). Accordingly, the Company has complied with Rule 723 of the Listing
Manual of the Singapore Exchange Securities Trading Limited.
Notice of
Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting (“AGM”) of Hoe Leong Corporation Ltd. (the
“Company”) will be held at No. 6 Clementi Loop, 4th Floor, Copenhagen Room, Singapore 129814 on Thursday, 30
April 2015 at 10.00am to transact the following businesses:-
AS ORDINARY BUSINESS
1.
To receive and adopt the Audited Financial Statements of the Company for the financial
year ended 31 December 2014 and the Directors’ Report and the Auditors’ Report thereon.
2.
To re-elect the following Directors retiring by rotation pursuant to Article 95(2) of the
Company’s Articles of Association:
3.
(Resolution 1)
(i)
Mr Kuah Geok Khim
(Resolution 2)
(ii)
Mr Quah Yoke Hwee
(Resolution 3)
To re-elect the following Directors retiring by rotation pursuant to Article 96 of the Company’s
Articles of Association:
(i)
Mr Hoon Ching Sing
(Resolution 4)
(ii)
Mr Yeoh Seng Huat Geoffrey
(Resolution 5)
Both Messrs Hoon Ching Sing and Yeoh Seng Huat Geoffrey are considered
independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore
Exchange Securities Trading Limited (“SGX-ST”). Mr Hoon Ching Sing will, upon
re-election as a Director of the Company, remain as the Chairman of the Audit
Committee and a member of the Remuneration Committee. Mr Yeoh Seng Huat
Geoffrey will, upon re-election as a Director of the Company, remain as the Chairman
of the Nominating Committee and a member of the Audit Committee and the
Remuneration Committee.
4.
To approve payment of Directors’ fees of SGD140,000 for the financial year ending 31
December 2015 (31 December 2014: SGD140,000).
(Resolution 6)
5.
To re-appoint Messrs KPMG LLP as Auditors of the Company for the financial year ending
31 December 2015 and to authorise the Directors to fix their remuneration.
(Resolution 7)
6.
To transact any other ordinary business which may be properly transacted at an Annual
General Meeting.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or
without modifications:7.
Authority to issue shares
(Resolution 8)
99
100
Notice of
“That pursuant to Section 161 of the Companies Act, Chapter 50 (“Act”), and the Listing
Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and
is hereby given to the Directors of the Company to:(a)
(i)
issue shares in the capital of the Company whether by way of rights, bonus
or otherwise;
(ii)
make or grant offers, agreements or options that might or would require
shares to be issued or other transferable rights to subscribe for or purchase
shares (collectively, “Instruments”) including but not limited to the creation
and issue of warrants, debentures or other instruments convertible into
shares;
(iii)
issue additional Instruments arising from adjustments made to the number
of Instruments previously issued in the event of rights, bonus or capitalisation
issues.
at any time to such persons and upon such terms and for such purposes as the
Directors may in their absolute discretion deem fit; and
(b)
(notwithstanding that the authority conferred by the shareholders may have ceased
to be in force) issue shares in pursuance of any Instrument made or granted by the
Directors while the authority was in force,
provided always that
the aggregate number of shares to be issued pursuant to this resolution (including
shares to be issued in pursuance of Instruments made or granted pursuant to this
resolution) does not exceed 50% of the Company’s total number of issued shares
(excluding treasury shares), of which the aggregate number of shares (including
shares to be issued in pursuance of Instruments made or granted pursuant to
this resolution) to be issued other than on a pro rata basis to shareholders of the
Company does not exceed 20% of the total number of issued shares (excluding
treasury shares) of the Company, and for the purpose of this resolution, the total
number of issued shares (excluding treasury shares) shall be the Company’s total
number of issued shares (excluding treasury shares) at the time this resolution is
passed, after adjusting for:
(i)
new shares arising from the conversion or exercise of convertible securities,
(ii)
new shares arising from exercising share options or vesting of share awards
outstanding or subsisting at the time this resolution is passed provided the
options or awards were granted in compliance with Part VIII of Chapter 8 of
the Listing Manual of the SGX-ST, and
(iii)
any subsequent bonus issue, consolidation or subdivision of the Company’s
shares, and
Notice of
such authority shall, unless revoked or varied by the Company at a general meeting,
continue in force until the conclusion of the next AGM or the date by which the next
AGM of the Company is required by law to be held, whichever is the earlier.”
(See Explanatory Note 1)
8.
Authority to Grant Options and to Issue Shares under the Hoe Leong Share Option Scheme
2009
(Resolution 9)
“That authority be and is hereby given to the Directors of the Company to offer and grant
options from time to time in accordance with the rules of the Hoe Leong Share Option
Scheme 2009 (“ESOS 2009”) and pursuant to Section 161 of the Act, to allot and issue from
time to time such number of shares in the capital of the Company as may be required to be
issued, provided the aggregate number of shares to be issued pursuant to:
(a)
the ESOS 2009; and
(b)
the Hoe Leong Performance Share Plan 2009
shall not exceed 15% of the total number of issued shares (excluding treasury shares) on
the day immediately preceding the date of grant of option from time to time during the
existence of the ESOS 2009 and in accordance with the rules of the ESOS 2009.”
9.
Authority to Grant Awards and to Issue Shares under the Hoe Leong Performance Share (Resolution 10)
Plan 2009
“That authority be and is hereby given to the Directors of the Company to offer and grant
awards from time to time in accordance with the rules of the Hoe Leong Performance Share
Plan 2009 (“PSP 2009”) and pursuant to Section 161 of the Act, to allot and issue from time
to time such number of shares in the capital of the Company as may be required to be
issued, provided the aggregate number of shares to be issued pursuant to:
(a)
the PSP 2009; and
(b)
the ESOS 2009
shall not exceed 15% of the total number of issued shares (excluding treasury shares) on
the day immediately preceding the date of grant of award from time to time during the
existence of the PSP 2009 and in accordance with the rules of the PSP 2009.”
101
102
Notice of
10 .
Proposed renewal of the Share Buy-Back Mandate
“That:(a)
for the purposes of Sections 76C and 76E of the Act, the exercise by the Directors
of all the powers of the Company to purchase or otherwise acquire issued ordinary
shares (“Share Buy-Backs”) in the capital of the Company (“Shares”) not exceeding
in aggregate the Prescribed Limit (as hereinafter defined), at such price(s) as may be
determined by the directors of the Company (“Directors”) from time to time up to
the Maximum Price (as hereinafter defined), whether by way of:(i)
on-market Share Buy-Backs (each an “On-market Share Buy-Back”) transacted
on the SGX-ST; and/or
(ii)
off-market Share Buy-Backs (each an “Off-market Share Buy-Back”) effected
otherwise than on the SGX-ST in accordance with any equal access schemes
as may be determined or formulated by the Directors as they consider fit,
which schemes shall satisfy all the conditions prescribed by the Act,
and otherwise in accordance with the applicable provisions of the Act and the Listing
Manual of the SGX-ST, be and is hereby authorised and approved generally and
unconditionally (the “Share Buy-Back Mandate”);
(b)
(c)
unless varied or revoked by the Company in general meeting, the authority conferred
on the Directors pursuant to the Share Buy-Back Mandate may be exercised by the
Directors at any time and from time to time during the period commencing from the
date of the passing of this Resolution and expiring on the earlier of:(i)
the date on which the next AGM of the Company is held or required by law
to be held;
(ii)
the date on which the Share Buy-Backs are carried out to the full extent
mandated; and
(iii)
the date on which the authority conferred by the Share Buy-Back Mandate is
revoked or varied by the Company in general meeting;
in this Resolution:“Prescribed Limit” means 10% of the total number of Shares as at the date of
passing of this Resolution unless the Company has effected a reduction of the share
capital of the Company in accordance with the applicable provisions of the Act, at
any time during the Relevant Period, in which event the issued ordinary share capital
of the Company shall be taken to be the amount of the issued ordinary share capital
of the Company as altered (excluding any treasury shares that may be held by the
Company from time to time);
“Relevant Period” means the period commencing from the date on which the last
AGM was held and expiring on the date the next AGM is held or is required by law
to be held, whichever is the earlier, after the date of this Resolution;
(Resolution 11)
Notice of
“Maximum Price” in relation to a Share to be purchased or acquired, means the
purchase price (excluding brokerage, commissions, stamp duties, applicable goods
and services tax and other related expenses) to be paid for a Share, which shall not
exceed:-
(d)
(i)
in the case of an On-market Share Buy-Back, 5% above the average of the
closing market prices of the Shares over the last 5 market days on the SGX-ST
on which transactions in the Shares were recorded, immediately preceding
the day of the On-market Share Buy-Back by the Company, and deemed to
be adjusted for any corporate action that occurs after such 5-day period; and
(ii)
in the case of an Off-market Share Buy-Back pursuant to an equal access
scheme, 20% above the average of the closing market prices of the Shares
over the last 5 market days on the SGX-ST on which transactions in the Shares
were recorded, immediately preceding the day on which the Company
announces its intention to make an offer for the purchase of Shares from its
shareholders, stating the purchase price for each Share and the relevant terms
of the equal access scheme for effecting the Off-market Share Buy-Back, and
deemed to be adjusted for any corporate action that occurs after such 5-day
period; and
the Directors of the Company be and are hereby authorised to complete and do
all such acts and things (including executing such documents as may be required)
as they may consider necessary or expedient to give effect to the transactions
contemplated by this Resolution.”
On Behalf of the Board
KUAH GEOK LIN
Dated: 15 April 2015
103
104
Notice of
Explanatory Notes:
1.
Resolution 8, if passed, will authorise and empower the Directors of the Company from the date of the above
AGM until the next AGM to issue shares and convertible securities in the Company up to an amount not
exceeding in aggregate 50% of the total number of issued shares (excluding treasury shares) of the Company
of which the total number of shares and convertible securities issued other than on a pro rata basis to existing
shareholders shall not exceed 20% of the total number of issued shares (excluding treasury shares) of the
Company at the time the resolution is passed, for such purposes as they consider would be in the interests of
the Company. Rule 806(3) of the Listing Manual of Singapore Exchange Securities Trading Limited currently
provides that the total number of issued shares (excluding treasury shares) of the Company for this purpose
shall be the total number of issued shares (excluding treasury shares) at the time of this resolution is passed
(after adjusting for new shares arising from the conversion of convertible securities or share options on issue at
the time this resolution is passed and any subsequent consolidation or subdivision of the Company’s shares).
This authority will, unless revoked or varied at a general meeting, expire at the next AGM of the Company.
2.
Resolution 9, if passed, will authorise and empower the Directors of the Company from the date of this
Meeting to the next AGM to offer and grant options under the Hoe Leong Share Option Scheme 2009
(“ESOS 2009”) and to allot and issue shares, provided the total number of issued shares (excluding treasury
shares) of the Company pursuant to (a) the ESOS 2009; and (b) the Hoe Leong Performance Share Plan 2009
(“PSP 2009”), shall not exceed 15% of the total number of issued shares (excluding treasury shares) of the
Company from time to time during the existence of the ESOS 2009.
3.
Resolution 10, if passed, will authorise and empower the Directors of the Company from the date of this
Meeting to the next AGM to offer and grant awards under the PSP 2009 and to allot and issue shares, provided
the total number of issued shares (excluding treasury shares) of the Company pursuant to (a) the PSP 2009;
and (b) the ESOS 2009, shall not exceed 15% of the total number of issued shares (excluding treasury shares)
of the Company from time to time during the existence of the PSP 2009.
4.
Resolution 11 is to renew the Share Buy-Back Mandate which was approved by the shareholders on 25 April
2014. Please refer to the Appendix to this Notice of Annual General Meeting for details.
Notes:
1.
A member of the Company entitled to attend and vote at this AGM is entitled to appoint not more than two
(2) proxies to attend and vote in his stead.
2.
A proxy need not be a member of the Company.
3.
If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorised
officer or attorney.
4.
The instrument appointing a proxy must be deposited at the registered office of the Company at No. 6
Clementi Loop, Singapore 129814, not later than 48 hours before the time appointed for the AGM.
Personal data privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual
General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use
and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing
and administration by the Company (or its agent) of proxies and representatives appointed for the Annual General
Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes
and other documents relating to the Annual General Meeting (including any adjournment thereof), and in order for
the Company (or its agent) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively,
the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or
representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/
or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such
proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in
respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
This page has been intentionally left blank.
105
106
This page has been intentionally left blank.
HOE LEONG CORPORATION LTD.
(Company Registration No.: 199408433W)
(Incorporated in the Republic of Singapore)
PROXY FORM
FOR ANNUAL GENERAL MEETING
IMPORTANT:
1. For investors who have used their CPF monies to buy ordinary shares in the
capital of Hoe Leong Corporation Ltd., this Annual Report 2014 is forwarded to
them at the request of their CPF Approved Nominees and is sent solely FOR
INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective
for all intents and purposes if used or purported to be used by them.
3. CPF investors who wish to attend the Meeting as an observer must submit
their requests through their CPF Approved Nominees within the time frame
specified. If they also wish to vote, they must submit their voting instructions to
the CPF Approved Nominees within the time frame specified to enable them to
vote on their behalf.
(PLEASE SEE NOTES OVERLEAF BEFORE COMPLETING THIS FORM)
I/We
(Name)
of
(Address)
being a member/members of HOE LEONG CORPORATION LTD. (the “Company”), hereby appoint:–
Name
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
and/or (delete as appropriate)
Name
or failing him/her, the Chairman of the Annual General Meeting (the “Meeting”) as my/our proxy/proxies to vote for
me/us on my/our behalf at the Meeting of the Company to be held at No. 6 Clementi Loop, 4th Floor, Copenhagen
Room, Singapore 129814 on Thursday, 30 April 2015 at 10.00am and at any adjournment thereof.
I/We direct my/our proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Meeting as
indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the
Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The
authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.
Resolutions
Ordinary Resolutions
No
1
Directors’ Report and Audited Financial Statements for the financial year
ended 31 December 2014
2
Re-election of Mr Kuah Geok Khim as a Director
3
Re-election of Mr Quah Yoke Hwee as a Director
4
Re-election of Mr Hoon Ching Sing as a Director
5
Re-election of Mr Yeoh Seng Huat Geoffrey as a Director
6
Approval of Directors’ fee of SGD140,000 for the financial year ending 31
December 2015
7
Re-appointment of Messrs KPMG LLP as Auditors
8
Authority to issue shares
9
Authority to grant option to issue shares under the Hoe Leong Share Option
Scheme 2009
10
Authority to grant awards and to issue shares under the Hoe Leong
Performance Share Plan 2009
11
Renewal of the Share Buy-Back Mandate
For
Against
(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)
Signed this
day of
2015.
#
Total Number of Shares in:
(a) CDP Register
(b) Register of Members
Signature(s) of Shareholder(s) or Common Seal
IMPORTANT:–
Please read the notes overleaf:
No. of Shares
Notes:1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint
not more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company.
2. Where a member of the Company appoints two proxies, he shall specify the proportion of his shareholding
(expressed as a percentage of the whole) to be represented by each such proxy.
3. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly
authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it
must be executed either under its common seal or under the hand of its attorney or duly authorised officer.
4. A corporation which is a member of the Company may authorise by resolution of its directors or other
governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in
accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.
5. The instrument appointing proxy or proxies, together with the power of attorney or other authority (if any)
under which it is signed, or notarially certified copy thereof, must be deposited at the registered office of
the Company at No. 6 Clementi Loop, Singapore 129814 not later than 48 hours before the time set for the
Annual General Meeting.
6. A member should insert the total number of shares held. If the member has shares entered against his name
in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore),
he should insert that number of shares. If the member has shares registered in his name in the Register of
Members of the Company, he should insert the number of shares. If the member has shares entered against
his name in the Depository Register and shares registered in his name in the Register of Members of the
Company, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will
be deemed to relate to all the shares held by the member of the Company.
7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete,
improperly completed or illegible or where the true intentions of the appointor are not ascertainable from
the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the
case of members of the Company whose shares are entered against their names in the Depository Register,
the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown
to have shares entered against their names in the Depository Register 48 hours before the time appointed for
holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.
8. A Depositor shall not be regarded as a member of the Company entitled to attend the Annual General
Meeting and to speak and vote thereat unless his name appears on the Depository Register 48 hours before
the time set for the Annual General Meeting.
GENERAL
The Company shall be entitled to reject the instrument appointing a proxy if it is incomplete, improperly completed
or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor
specified in the instrument appointing a proxy. In addition, in the case of shares entered in the Depository Register,
the Company may reject any instrument appointing a proxy lodged if the member, being the appointor, is not shown
to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for
holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.
Personal data privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual
General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use
and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing
and administration by the Company (or its agent) of proxies and representatives appointed for the Annual General
Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes
and other documents relating to the Annual General Meeting (including any adjournment thereof), and in order for
the Company (or its agent) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively,
the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or
representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/
or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such
proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in
respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
Corporate Information
Board of Directors
Company Secretaries
Executive:
James Kuah Geok Lin (Chairman and CEO)
Quah Yoke Hwee (Executive Director)
Paul Kuah Geok Khim (Executive Director)
Ang Siew Koon, ACIS
Low Siew Tian, ACIS
Non-Executive:
Hoon Ching Sing (Appointed as Independent Director
on 1 October 2014; Appointed as the Lead Independent
Director, on 30 October 2014)
Yeoh Seng Huat Geoffrey (Independent Director,
appointed on 2 January 2015)
Ang Mong Seng (Independent Director)
Lim Kok Hoong (Lead Independent Director,
resigned on 30 October 2014)
Peter Boo Song Heng (Independent Director,
resigned on 2 January 2015)
Audit Committee
Lim Kok Hoong (Chairman, resigned on
30 October 2014)
Hoon Ching Sing (Chairman, appointed on
30 October 2014)
Yeoh Seng Huat Geoffrey (appointed on
2 January 2015)
Ang Mong Seng
Peter Boo Song Heng (resigned on
2 January 2015)
Nominating Committee
Peter Boo Song Heng (Chairman, resigned on
02 January 2015)
Yeoh Seng Huat Geoffrey (Chairman,appointed on
2 January 2015)
Ang Mong Seng
James Kuah Geok Lin
Remuneration Committee
Ang Mong Seng (Chairman)
Hoon Ching Sing (appointed on 1 October 2014)
Yeoh Seng Huat Geoffrey (appointed on 2 January 2015)
Lim Kok Hoong (resigned on 30 October 2014)
Peter Boo Song Heng (resigned on 2 January 2015)
Registered Office
6 Clementi Loop, Singapore 129814
Tel : (65) 6463-8666 Fax : (65) 6564-7252
Website : http://www.hoeleong.com
Registration No. 199408433W
Share Registrar
Tricor Barbinder Share Registration Services
(A division of Tricor Singapore Pte. Ltd.)
80 Robinson Road
#02-00
Singapore 068898
Auditors
KPMG LLP
16 Raffles Quay, #22-00 Hong Leong Building
Singapore 048581
Audit Partner-in-charge
Low Hon Wah
Appointed with effect from financial year 2013
Principal Bankers
Australia and New Zealand Banking Group Limited
United Overseas Bank Limited
The Development Bank of Singapore Limited
Registration No: 199408433W
6 Clementi Loop
Singapore 129814
Tel : +65 6463 8666
Fax : +65 6564 7252

Hoe Leong Corporation Ltd. Annual Report 2014

Transcription

Similar documents

AVS24 2.4 GHZ Wireless Audio/Video Sender

FOL-1-FORMA 2 - Service Alberta

HEMINEVRIN - Alcohol and Alcoholism

No trophy could ever fully express our

A golden opportunity to A golden opportunity to

Building Capacity, Creating Jobs, Discovering and Developing

New User FFM Marketplace Testing

2015 Agriculture Federal Credit Union (AgFed) Board of Directors

Dianne Huffman CHAIR, AUDIT COMMITTEE